Why Leadership is So Overrated & How Supply Chains Work or Don't

This episode explores the common misconceptions about leadership and provides an in-depth analysis of supply chain mechanisms and their vulnerabilities.

1. Leadership is not a universal aspiration or ability; society's fixation on leadership can undermine the value of followership.
2. Supply chains are complex systems that involve multiple stages and components, making them susceptible to various disruptions.
3. The pandemic revealed the fragility of global supply chains, with significant impacts on product availability and business operations.
4. A better understanding and restructuring of supply chains are necessary to mitigate future disruptions.
5. Companies and governments need to reassess their strategies towards supply chain management, considering more sustainable and resilient practices.

1: Introduction to Leadership Overvaluation

Exploration of society's leadership obsession and its psychological impacts. Key discussion on why not everyone needs or wants to be a leader. Elias Aboujaoude: "Not everybody is leadership material, and not everybody has an interest in leading."

2: Understanding Supply Chains

A detailed examination of what supply chains are, how they function, and their critical role in global economics. Peter Goodman: "There are thousands of supply chains... it basically means how do we make stuff? How do we move raw materials?"

3: Impact of COVID-19 on Supply Chains

Discussion on how the pandemic exposed the vulnerabilities of supply chains and the consequences for global trade and local economies. Peter Goodman: "The work of the supply chain got swamped by the demand... resulting in disruptions."

1. Evaluate personal leadership aspirations critically; focus on strengths, whether in leading or following.
2. Businesses should invest in robust supply chain risk management to prepare for unforeseen disruptions.
3. Individuals should seek to understand the supply chain processes of products they use, promoting informed consumer decisions.
4. Encourage workplaces to respect and value both leaders and followers equally.
5. Advocate for transparency and improvements in supply chain regulations to prevent future breakdowns.

Sunscreen has been around for a long time. Has it changed much? Are there advancements in “sunscreen technology”? As summer begins, I explore the newest advancements in sunscreen. https://www.realsimple.com/new-sunscreens-6831077

We revere leaders. School mottos often say something about “Developing tomorrow’s leaders today…” Everyone should aspire to be a leader. But what if you don’t want to be a leader? If everyone becomes a leader – who is left to follow? Is everyone “leadership material”? To hear the surprising science about leadership, listen to my guest Dr. Elias Aboujaoude. He is a psychiatry professor and researcher at Stanford University, and author of the book, A Leader's Destiny: Why Psychology, Personality, and Character Make All the Difference (https://amzn.to/4b6JsOd)

Over the last few years we have heard about the supply chain in the news. It’s that somewhat vague process of making and getting products to where they need to be. So how does it all work? Why does it sometimes fail? Why does it often seem so fragile? Joining me to help us understand the supply chain and explain why you should care about it is Peter Goodman. He is the Global Economics Correspondent for The New York Times and he is author of a book called How the World Ran Out of Everything: Inside the Global Supply Chain (https://amzn.to/3KAlQXJ).

With summer comes lightning. How likely are you to get struck? And is it true that if you have been struck once, it is more likely to happen again? Listen for the answers and details. https://www.britannica.com/question. Source: What-are-the-chances-of-being-struck-by-lightning Source: http://lightningsafetycouncil.org/ and https://www.britannica.com/question/What-are-the-chances-of-being-struck-by-lightning

People

Elias Aboujaoude, Peter Goodman

Companies

Stanford University, The New York Times

Books

"A Leader's Destiny" by Elias Aboujaoude

Guest Name(s):

Elias Aboujaoude, Peter Goodman

Content Warnings:

None

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Potential savings will vary. Discounts not available in all states and. Situations today on something you should know has sunscreen technology improved or is it still just sunscreen? Then we live in a leadership crazed world. Everyone should want to be a leader.

Elias Aboujaoude
However, not everybody is leadership material, and not everybody has an interest in leading. However, if you happen not to be interested in leading today, you are basically convinced that something is wrong with you. Also, it's lightning season. How likely is it that lightning will strike you and the supply chain? We've heard a lot about it and how it sometimes fails.

Mike Carruthers
But what is the supply chain? You know, we throw this nebulous term supply chain around. There are thousands of supply chains. It basically means how do we make stuff? How do we move raw materials?

Peter Goodman
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Mike Carruthers
Hi and welcome to something you should know. Since we're getting into the summer season, let's talk a little bit about sunscreens. Because you may not have noticed it, but over the years, sunscreens have really changed and improved. For one thing, extra ingredients are being added to sunscreens. Specifically, theres an increased emphasis on creating formulas that protect the skin not only from the sun, but also from other kinds of light, like the light emitted from electronic screens.

While that light doesnt cause skin cancer, we do know it can contribute to signs of premature aging still, there are myths about sunscreen. People still say I dont wear sunscreen because I have to get my vitamin D from the sun. And vitamin D is important. But getting it from the sun may not be the best way. According to one doctor, the skin receptors that absorb vitamin D are maxed out after about five to ten minutes of exposure.

So if you need vitamin D, diet and supplements may be a better way to go. The advice is still from the American Academy of Dermatology and the Skin Cancer foundation. Wear a broad spectrum SPF 30 or higher sunscreen every day. And that is something you should know.

Leadership is a big deal in this country. It's an industry. I mean, think of all the books and seminars and podcasts about leadership. Look at the mission statement of many schools and colleges. It frequently says something about training tomorrow's leaders, as if we should all strive to be in leadership positions.

Well, should we all strive to be leaders? Can anyone be a leader if they try hard enough? Or are leaders born? You either have it or you dont. Well, the research is pretty clear, and I think youll find it surprising.

Here to discuss it is Doctor Elias Abujadi. He is a professor of psychiatry and a researcher at Stanford University and author of a book called a leader's destiny, why psychology, personality, and character make all the difference. Hi, doctor. Welcome to something you should know. Thank you for having me.

So talk about your perspective on all of this, how you view this drive to get people to become leaders, that that's what we should all want to be. Well, my perspective is that there's a leadership obsession almost that permeates all of culture. And you see symptoms of it in schools. You see symptoms of it in corporate culture. You see symptoms of it in, and politics.

Elias Aboujaoude
As you said, everyone and their grandmother wants to become a leader. So there's a very healthy, very exuberant demand, but there's also a supply in the form of really a leadership industrial complex that's out there trying to convince everyone that they are essentially reasonable leadership material. They just have to sign on the right executive coach or sign up for the right leadership minor or leadership major or leadership development camp. So there's all these forces unfolding and happening before our eyes. And what is suffering along the way is our very notion of what a good leader is and how a good leader happens.

We have lost sight of that. And so let's start with what you said. Is everybody leadership material? Because my sense is not only is everybody not leadership material, but a lot of people don't have no interest? Absolutely.

Not everybody is leadership material, and not everybody has an interest in leading. However, if you happen not to be interested in leading today, you are given an inferiority complex. You are basically convinced that something is wrong with you. And what is it about you that's not making you want to become a leader and sign up for all these leadership making opportunities? So, no, not everyone has what it takes to become a leader and to succeed and be happy as one.

So when you think of emotional intelligence, for example, these are personality traits that have been associated with the emergence and the success of leaders. And these are traits that are really either there or not. And if they're not, it's very hard to develop them. Yet again, there's an entire industry that's out to convince us that this is possible. We can give you a personality transplant and turn you into the leader that you want to be, or that culture is convincing you you can be.

Mike Carruthers
Has anyone considered the fact that if we all became leaders, there would be no one to lead? You're absolutely right. I mean, the world needs followers. And a good leadership culture, I would say, starts by respecting, promoting, and nurturing follow followers, not giving them an inferiority complex, which is what our current approach to leadership is doing. Yeah, well, that's the thing, what you just said, because you're almost made to feel bad.

What do you mean you don't want to be a leader? Well, it's just, I mean, leadership is in and of itself like a career. It's a thing. It's something you want to do. Maybe you just want to make widgets or own a business that makes widgets.

But it doesn't mean you want to become this big world class leader, because that doesn't appeal, I think, to most people. Absolutely. And not just that, but what if you're a cello virtuoso who's applying to college? Well, you're made to feel inferior now because you can't count ten groups that you were the president of in high school. I mean, this thing really permeates all of cultures and starts very early, and as I see it, is very unhealthy.

So what is it you think needs to happen here? Well, what needs to happen is that we need to go back to psychology as being really the very basis of how leaders happens. You need to have a certain psychology, and leadership either aligns or doesn't align with this psychology. And if it doesn't align with this psychology, there are many other ways to feel worthwhile, to contribute to society, to build your self esteem. That don't go.

Elias Aboujaoude
Go through the corner office or the C suite. So we need to go back to psychology as the necessary foundation of leadership and as something that cannot be easily manipulated by executive coaches and Ted talkers and the whole sort of leadership industry. And more importantly, we need to stop looking down on followers, including on ourselves, if we happen to identify more with being a follower than an alpha leader. Well, are leaders, do you think leaders are born like, are you a naturally natural born leader? Or is leadership something you, anybody can develop if they really, really want to?

Mike Carruthers
Or is it maybe a combination of all of that or what? I would say it's a combination, but I definitely lean more in the direction of either having these traits we were talking about or not having them. And if you don't have them, then it's a very difficult process to divide them. Now, there are things that you can be coached about, for example, you know, body language, the importance of posture, the importance of nonverbal cues, eye contact, those kinds of features are indeed coachable. But when you think about things like empathy, self knowledge, social awareness, wanting to lift others, wanting to serve, these are the traits that we really look for, or should look for in leaders.

Elias Aboujaoude
And these are not teachable or are very, very difficult to teach. When you look at great leaders in business, in politics, in history, can you look at them and say they all share these very similar traits, or are great leaders great leaders because they lead in their own way? That's such a great question. I would say they're leaders in their own way, but they all seem to have this EQ, this emotional intelligence piece that seems to unite them. Even though their biographies are so unique, their trajectories are so different, and the circumstances of their rise cannot be replicated.

So you do have this sort of undercurrent of traits that seem to be present across any number of them, but their stories are so unique, and they're unique in a way that makes you wonder about, again, the effectiveness and the efficacy of all these courses out there that seem to suggest that leadership is linear. Follow these steps and you're all but guaranteed the position of your dreams. Is there a path to leadership? If you're somebody who is destined to be a leader, how do you get there? How do you get to the top and lead?

Well, if they're destined to be leaders and if it aligns with their psychology, they are more likely to succeed and they are more likely to be happy leading. I think a lot of the time people are driven into leadership through all sorts of pressures talked about, including, you know, the cultural pressure, the intense marketing, the leadership industry. And if it doesn't align with who they are, then they are miserable leading. And as I'm a psychiatrist, I see people in my clinic, including leaders, who see themselves as misfits. And it's always really striking to me how unhappy they can be personally.

Even when you look at metrics of success, they're actually doing a reasonably good job. So to be happy leading, I mean, there's the issue of making it to a leadership position and succeeding as leader. But success is not just how you are viewed externally and the metrics by which you are measured. It's also whether you are happy leading. And I've seen more than my share of leadership in Silicon Valley and elsewhere who are very unhappy, bleeding and feel trapped in this role, even though they worked for a long time toward achieving it.

Mike Carruthers
And they shouldn't be leaders, or they're leaders, but something else is wrong. So they could be happier doing other things, and they will be the first to, to acknowledge that they were driven to leadership by the wrong forces and for the wrong reasons. And even if they're doing a good job leading in terms of, again, the metrics that society and their boards, you know, are measuring them on, they are personally unhappy leading because they don't have those personality traits that align with leadership. We're talking about leadership and why some people are cut out to be leaders and some people just aren't. My guest is Doctor Elias Abujadi.

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Need to hire you. Need indeed. So Elias so what you're saying is you kind of have to come pre programmed with the leadership thing because if you don't have it, you don't have it. And you're not going to be successful at it. If you don't have it, you don't have it.

Elias Aboujaoude
And this is not something that I'm just observing. This is also something that has been studied in other aspects of personality, which is really interesting because we talked about emotional intelligence and how it's an aspect of personality that's either there or it's not. But people have been fascinated by personality psychology for decades. And we have studies now. We have studies that are 40, 50 years long where they took school children and ranked them on 30, 40 personality traits and observed how these traits changed over time and interviewed them again 40 plus years later.

And it was striking how much stability there was in their personalities. So I can point to at least two long term studies like that one that looked at Harvard graduates at the age of 22 and re interviewed them again at the age of 67. Another study that looked at students between the ages of six and twelve in Hawaii who were interviewed again some 40 years later. And again, the stability and personality is very striking. And that's personality as a whole, including the kinds of traits that we are talking about when it comes to leadership in my field of psychiatry.

When you look at the history of psychiatry, psychoanalysis, of course, the freudian school of psychotherapy dominated the early history in the 20th century of my field. And Freud himself used to say that psychotherapy and the business of changing people's personalities is not for the commitment phobic. This is a long term commitment. It's a long term pursuit and not something that you can achieve over a weekend's boot camp in leadership training. What is a leader do?

Mike Carruthers
And I guess what I mean by that is I've always thought that one of the reasons people don't want to become leaders is there are a lot of people who would rather do than manage other people who do. They like doing the work. They don't want to manage other people and lead them to do the work. They just want to do the work. Yes.

Elias Aboujaoude
And the idea of a leader is that you go from doing the work to inspiring others to do it. So there is that ability to inspire and move people to work with you and follow you toward this goal that you've set for them. So that's the transition to leadership. And absolutely not everyone has it in them to be able to fulfill this role and move others this way. Do you have any idea from doing the work you've done and looking at the research, any idea of what percentage of the population is really cut out to be a leader versus what percentage are followers?

You know, I cannot give you a percentage, but I would say that most people are not cut out for leadership, and that's why, mathematically, there's more followers than there are leaders. You know, I hadn't really thought about this before this conversation, but when you think back to school, when you were in school, the president of the chess club has much more stature than a member of the chess club. The president of your high school class has much more stature than just a member of the high school class who may have done really well in school, but he's not a leader in that sense. He doesn't have the title of leader. Like, we hold that up as being so spectacular and something to envy and strive for.

Mike Carruthers
But as you're pointing out, not everybody is cut out for that. In fact, most people are not cut out for that, but yet we revere those people as if we should all be that way. Absolutely. And I'm so glad you bring up schools specifically because, yes, some of that has always been the case. But what's happening is that this brainwashing has totally infected schools and that the number of schools that are changing their mission statements and their visions, to mention leaders and the future leaders and developing the future leaders and that kind of thing, the number of these schools is staggering.

Elias Aboujaoude
You know, what happened to wanting to develop the best citizens that you can? You know, the educate the cities, there's the citizens of the world, the voters of the world. All this seems to have taken a back seat to wanting to develop the leaders of the future. And again, think of the majority of. Of their students who either aren't interested in being leaders or don't have what it takes and the inferiority complex that this could give rise to.

Mike Carruthers
Well, this is so interesting. And it's almost like you're giving people permission. Like, if you haven't wanted to be a leader and told you should be, here's your permission now to just say, screw this. This is not me. I'm not cut out for this.

The evidence is pretty clear. And so leave me alone. Absolutely. It's okay to be a leader, but it's also okay not to be one. Do what aligns with your psychology and don't tie your self worth to a leadership position.

You wonder how many kids have really, and grown ups have struggled with this because of the message of, you need to be a leader, you need to. You need to lead. That's where the money is, that's where the prestige is. But if you have no interest or aptitude for it, you're bound to fail. And we have fully embraced that message, unfortunately, at so many levels.

Elias Aboujaoude
And we are paying the price. Again, look at recent stories from leaders in academia. Look at corporate culture. Look at politics. Our approach to leadership is broken.

And there's so much that hangs on this because we face such overwhelming challenges. And if we are to meet these challenges, we need good leadership. And to get to this good leadership, our concept and approach to leadership culture have to change. Well, I have to say, you've made me think about this topic differently than I've ever thought before because I, like so many people, have bought into this idea that leadership, you know, that's what you aspire to, and it's really essential, I think, that we've got to rethink that whole approach to leadership because, well, there'll be no one to follow the leaders if we're all leaders. But some of us just aren't meant to be leaders.

Mike Carruthers
And that's okay. I've been speaking with Doctor Elias Abujadi. He is a professor of psychiatry and researcher at Stanford and author of the book A Leader's why psychology, personality and character make all the difference. There's a link to that book at Amazon in the show notes if you would like to read it. And I really appreciate you coming on Elias and explaining all this.

Great, thanks. Thanks Mike. It's been a pleasure and I enjoyed the conversation and the great questions. Hey, here's something you should know. Some experts estimate that up to 77% of the population has some level of speaking anxiety.

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Mike Carruthers
Have you ever thought about how the stuff you own made its way from wherever it started to you? It does that through the supply chain. Everything you buy, your food, clothes, your car, everything you have got to you through a supply chain. And the supply chain is something very few of us really worry about much or think about until it stops working. Lately, there have been some real issues with the supply chain.

Products not getting where they're supposed to be, when they're supposed to be there. And that can be a little scary. It's something we should all be concerned about and understand better. And I have just the person to explain it. Peter Goodman is the global economics correspondent for the New York Times, and he's author of a book called how the World ran out of everything inside the global supply Chain.

Hi, Peter. Good to have you here. Thanks so much for having me. So I have heard the term supply chain and throw it around once in a while. But I have to admit, I don't really know what it is.

I mean, I kind of have a sense of what it is. But what is the supply chain? You know, we throw this nebulous term supply chain around as if everyone's clear on what it means. Almost like, you know, it's something designed. A bunch of wizards met at the top of a mountain and engineered it.

Peter Goodman
And, of course, it's this thing that's kind of grown of its own volition, almost. There are thousands of supply chains. It basically means, how do we make stuff? What are the processes that go into making stuff? How do we move raw materials and parts around to factories that manufacture?

And how do we take finished goods and get them to stores and eventually to your door? So essentially, it's making stuff, and getting it to you is. Yeah, yeah. When you think about all the steps along the way in a supply chain, building things and getting them where they're supposed to be, it seems like it could be a fairly fragile system that it could break at any point along the way. Yet it doesn't really seem to very often.

Mike Carruthers
I mean, we didn't really notice it or really talk about it much, I guess, until Covid, when we started to see that things weren't getting where they were supposed to be. The supply chain is actually one of those rare things that, in a time when we disagree about so much, everyone loves to talk about our political polarization and how divided we are. We all do pretty much take for granted that you click here and you wait a day, a couple days, whatever. A truck shows up at your door, and your goods are unloaded, you go to your local superstore, and there are all of the goods you could possibly imagine, and then some. And I think that experience during the pandemic, and some of it was stuff like toilet paper, breakfast cereal, and some of it was life saving things like medical gowns, medical devices.

Peter Goodman
When we ran out of computer chips, it was beyond bewildering to discover that in the midst of the worst public health catastrophe in 100 years, something as basic as the supply chain buckled as well. Basically what happened, and it's a long story, is that the work of the supply chain got swamped by the demand. So at the beginning of the pandemic, particularly in the United States, but this is really a global phenomenon. Economists anticipated and people running businesses anticipated. Okay, we get it.

People can't go to work, unemployment rates going up. There's less spending power. People will buy less stuff. So those in control of factories reduced their capacity. Shipping companies took ships that normally carry containers from factory towns, especially in Asia, across the Pacific Ocean to ports like Los Angeles and Long beach.

For Americans said, we're not going to need as many ships, we're going to idle them. Computer chip manufacturers said, we're clearly not going to need as many of those because we think sales for everything from iPhones to cars to appliances are going to drop. Well, long story short, what happens is people do stop spending money on all of the things that involve mixing with other human beings. We don't go to Disneyland. We don't get on airplanes to go to Europe on vacation.

We stop go to movie theaters and gyms, but we don't stop living. We go out and we buy exercise equipment instead of the gym that we put in our basements and our garages, and that stuff comes from China. We go and outfit our kitchens to compensate for the fact that we can't go have a restaurant meal. We buy appliances, baking goods. We buy all sorts of gadgets to amuse our kids, and it simply overwhelms the works.

And at the same time, and we can talk about this, the supply chain was already quite fragile because it had been governed by something called just in time. This idea that why waste money if you're a company warehousing goods against some trouble that will probably not happen anytime soon. Let's just go lean, have minimal inventory, and we'll take the extra money and give it to ourselves through executive compensation or to shareholders through dividends. So when the pandemic hits markets inventories low, and we had devalued a lot of the labor. So we supposedly run out of truck drivers, which is just a fancy way of saying we run out of people willing to live the miserable life of the truck driver because we downgraded wages.

Same goes for warehouses. The same goes for lots of industries involved in moving goods to our doors. But doesn't the. Generally speaking, because you can't run your business planning for the next pandemic to hit. So when these things disruptions happen and we run out of toilet paper, it fixes itself fairly quickly.

Mike Carruthers
And then we're back to equilibrium. Well, yes and no. I mean, toilet paper got fixed because it turned out we didn't really have a shortage in the production of toilet paper. What we had was panic buying and people started hoarding. So we had this imbalance that.

Peter Goodman
Yeah, that fixed itself. The impacts of a lot of these supply chain disruptions are still with us. I mean, computer chips, even a year after the shortages, you had people who needed medical devices. I mean, I tell the story of a guy in San Diego who needed a medical device for sleep apnea. This is a guy whose next breath literally depended upon having this device, and he couldnt get one because the manufacturer in San Diego discovered that four layers of the supply chain down, like the company in Australia that makes a little piece of a part that gets sent to Dubai for processing, that eventually gets sent to Taiwan to be turned into a computer chip.

Well, that company didn't have enough computer chips, and they were not prioritizing medical devices. They were prioritizing the biggest customers. The biggest customers are Google and Apple and other electronics gadgets makers. The same goes for contractors who still can't get hold of things like doorknobs or shades of paint or coatings. And this is part of the reason why we have this housing unaffordability crisis in the US.

We can't build as quickly as we want to. So, yeah, markets correct. And some markets have indeed corrected. We ran out of boba for boba tea. Well, that's not true anymore.

There's plenty of that. There's plenty of breakfast cereal on the shelves. But some things that we really need are still in short supply. And what we've learned is that this web of connections is really fragile. We don't know what the next shock will be, but there will undoubtedly be one, and we're still vulnerable to the next disruption.

Mike Carruthers
When I think of the supply chain, I think about things being moved around the world. Stuff from here goes over there and stuff from China comes here. And I know you talk about some of the milestones. The invention or the development of the container ship has to be huge in terms of the supply chain and moving. Things around the world, instead of centuries, literally, of technology not changing much where people on the docks did these incredibly dangerous jobs took days and days to load and unload ships.

Peter Goodman
Everything was essentially a custom job. You got to put this big hunk of beef over here, this big barrel full of oil over there. Well, the container allows you to put anything you want in a standard size box and stack it like children's blocks. It fits on the end of a truck, fits on rail, makes everything move much faster. And you get the rise of China as a trade colossus.

China enters the world trade organization in 2001. Well, so if you're a CEO of a company, you're sitting in a boardroom in New York or Seattle or wherever, and your job is to make life good for shareholders. The best way to do that is to lower your costs. Well, you now, between the shipping container and the rise of China, which has what seems like a sort of inexhaustible supply of cheap labor, you can make incredible amounts of stuff at really cheap prices and get that stuff on ships. And shipping is effectively free because most of the shipping companies are connected to the state.

They're keeping their. And by state, I mean South Korea, I mean Taiwan, I mean China. It's about keeping shipping prices low to boost exports. So you have this perfect apparatus to get stuff made cheap and ship it over to the United States until it breaks down. And when it breaks down, we wake up in the middle of the pandemic to discover, oh, something like 90% percent of our face masks that we need to outfit our frontline medical workers in the middle of a pandemic.

They're made in China. And guess what? We're having a trade war with China. Well, that's somewhat inconvenient, but it would. Seem that you cannot possibly predict everything that might go wrong.

Mike Carruthers
So we have trouble with China getting things from China. So even if we fix that, something else is going to happen that we weren't prepared for, because you can't prepare for everything. True. But you can have a hedge, and you can make sure that you do have some warehouses with backup parts of important things if you're running factory. I mean, this goes all the way back to Henry Ford and the beginning of mass assembly.

Peter Goodman
You better know, who am I depending on to get me my goods and what could happen such that I won't be able to produce at all. And you better have a backup plan. And for decades now, we have had people running major businesses who've been so incentivized to cut costs and make stock prices go up in the short term that they've just completely abdicated that basic. Responsibility but it seems that companies would have learned just from the pandemic that things have to be changed. People can't just go, well, glad that's over, and let's go back to the old way of doing things and wait till the next time things go down the drain.

Mike Carruthers
I mean, there must have been lessons learned from this. Well, some of that work is happening. I follow Columbia sportswear off to Guatemala. They're looking to, as they put it, sort of diversify away from heavy dependence on Asia and move stuff closer to their biggest market, the United States. Walmart is in the process of moving production to places like Mexico.

Peter Goodman
You don't have to depend upon shipping to get your stuff into North America. There's a push now to look at India, which is the one country that's big enough that it might actually be able to replicate some of China's supply chain. So some of that will happen. But history is not comforting. I wrote my first supply chain disruption story back in 1999 when there was a big earthquake in Taiwan and it hit the computer chip production there.

And a lot of people said, oh, whoops, we're too dependent on this one island for computer chips. We should take a look at that. And then nothing really happened. The landmark in this story is the Fukushima disaster. After the tsunami in Japan in 2012, again, we ran out of computer chips and other electronics, and a lot of people said similar stuff.

We're really too vulnerable. We've overdone it with just in time manufacturing. We need a more resilient supply chain. And here's the problem. Problem.

The basic incentives for companies, especially publicly traded companies, have not changed at all. I mean, if youre the CEO of a company and you say, hey, I think we should actually add to our cost by warehousing more stuff as a hedge against the next disaster, whenever that might be. Or I think maybe instead of just leaning on China, we should go set up production facilities in Turkey or Mexico or whatever. And thats going to cost us some money in the short term. Thats an invitation for the board to turn on you when your stock price doesnt perform well.

Whereas the guy who says, hey, lets just cut costs to the bone, it might be five or six years or ten years or whatever when the next crisis hits. And by that time, that guy is on a hammock somewhere drinking a cocktail, and its somebody elses problem. And that fundamental structure has not changed. And it doesnt seem like its likely to because it isnt really human nature to prepare for something that you can't see that you don't know what it is that. Yeah, I get that.

Mike Carruthers
You could stockpile stuff in a warehouse so you have some inventory in case something happens, but it just doesn't really seem like that's the way the human mind works. That's why there needs to be a serious look at workplace conditions for people we're depending on to drive our stuff around to keep our rail systems moving. Shipping is the area that sort of least regulated. I mean, we are living in a moment where three alliances. Think of this like airline alliances, like your star alliance or one world or whatever.

Peter Goodman
Three alliances of shipping container companies dominate 98% of the traffic from China to the west coast of the United States. And so during the pandemic, we see the cost of moving goods from the factories of China to the west coast of the US. And I should add la Long beach. These two ports, that's the gateway for 40% of the imports entering the United States. Well, the cost of moving one container goes up tenfold in the middle of the pandemic.

So what happens? Amazon, Walmart, the largest companies, are able to pay the freight. They can charter their own ships, and everybody else gets whacked and consumer prices go up. That's a failure of regulation. There used to be rules that would prevent that sort of price gouging, and there just aren't anymore.

Mike Carruthers
So if the current system isn't working and causes breaks in the supply chain, what's a better way to do it? As consumers, we have to think about place again in a way in which we haven't. I think most of us walk into a Walmart or a target or, or supermarket or whatever, and we're just thinking, we're assuming that someone's looking out for us in terms of basic product safety standards. We're comparing prices, we're taking a look, and that's as far as we go. It's time to start thinking about where things are made and to give a little bit of thought to the conditions under which they're made.

Peter Goodman
And then in terms of labor, I think we should welcome this wave of. Of labor mobilization that's allowing working people to get a greater share of the bounty of our very successful form of capitalism. And then the government is going to have to step back into markets that it's essentially relinquished since people like to start with Reagan in the eighties, but it's really Carter in the seventies. Carter started the deregulation of transportation systems, trucking, shipping, rail. And the result of that is we've got monopoly markets.

We've got very limited supply. We've got big companies. I mean, rail is a subject we could talk about for hours. We have rail systems that, from the beginning of american history, have really been engineered for the investors interests and not the interests of people who need to move stuff around. And we've done better at other times in history.

In the middle of the 20th century, we did a decent job of. Of gaining the market forces. I mean, we don't want to live in a society where the government dictates everything, but somebody's got to be on the job preventing price gouging, preventing monopoly power. And if we did all of those things, we would have a more resilient supply chain. But at what cost?

Mike Carruthers
Seems like things would be much more expensive. Well, they might be more expensive on individual products at any given point in time, but what was the cost of suddenly having to pay ten times as much to move a container full of goods in the middle of a pandemic? What was the cost of not being able to get medical devices in the worst of the pandemic? What was the cost of people who bought cars in 2021 and 2022, who had to pay $10,000 more than list price for a new car and just as much for a used car because the auto manufacturers couldn't deliver the goods? I mean, if you've telescoped the sticker price at any given moment of time, it might be marginally more to shift some production from China to India, from China to Vietnam, from China to Mexico.

Peter Goodman
But we know that when this system breaks down, there are social costs that are not easily captured in numbers, and the numbers themselves go up when companies that effectively have monopoly control over our lives jack up the prices. What about the companies that move the merchandise, the railway? And more interestingly, maybe the shipping companies, the ones with those big cargo containers on them that travel around the world, seems like they would have a lot of power over what gets where. In the book, I tell the story of talking to this guy, Dan Maffei, this former congressman from upstate New York who trump first appointed to the Federal Maritime Commission, a body that I'm sure no one has ever heard of. And it became very important in the middle of the pandemic because it regulates shipping.

And suddenly, Dan Maffey is supposed to fix the global shipping crisis. Biden has a ceremony where he thanks him as he signs this piece of legislation called the Ocean Shipping Reform act, that's supposed to give this obscure body the right to get involved when shipping companies really seem to be giving american importers and exporters a raw deal almond farmers in the Central Valley of California are sitting on a year plus of inventory thats sold to places like the Middle East, Japan, and they cant get their product there because the shipping carriers arent even bothering to stop to pick up their nuts at the port of Oakland because theyre making so much money moving factory goods from China across the water to La Long beach that theyre emptying the containers and then just putting them back on ships empty to go back to China to load them with more stuff as quickly as possible. They cant be bothered to go up the coast to Oakland to fill up with some almonds that theyre going to take. So these almond farmers are totally screwed. And Dan Maffei, the head of the Federal Maritime Commission, is supposed to fix this.

And when I start talking to him about this, it becomes clear, hes like, well, I better not push these companies too far because they might stop serving the american market. Really? So you think that Maersk, the giant danish shipping conglomerate, might decide to just bypass the worlds largest consumer economy if you try to scrutinize their business too hard. But that is the situation that were in. We are at the mercy of these foreign carriers.

Preston. Well, its interesting how the supply chain conversation is something that we kind of hear about a little bit in the background. Most of us don't really pay much attention to it, don't really understand it, and yet it impacts everyone. I've been speaking with Peter Goodman. He is the global economics correspondent for the New York Times, and his book is called how the World ran out of everything inside the global supply chain.

Mike Carruthers
And there's a link to his book at Amazon in the show notes. Thank you so much, Peter. I appreciate you explaining all this. Oh, I loved it. Yeah.

Peter Goodman
Great questions. I really appreciate it.

Mike Carruthers
Lightning season is, well, it's right now lightning strikes peak between April and November in most areas of the country. So how likely are you to be struck by lightning? Well, according to the editors of the Encyclopedia Britannica, the odds are that you will be struck by lightning in the US during your lifetime are one in 15,300. On average, 270 people in the US are struck by lightning every year. Only about 10% of those people actually die from the event.

Around the world, approximately 2000 people are struck by lightning every year. Lightning strikes are most frequent between four and 07:00 p.m. which unfortunately is the time of day when many outdoor games and events take place in open fields and near water. Is it true that if youve been struck by lightning once, youre more likely to be struck again? Well, sort of, but its more of a lifestyle statistic.

If youve been struck by lightning and continue to engage in lightning attracting activities like golf, youre more likely to be struck again. And that is something you should know. I know youre busy. You have a lot of things to do. But if you would please take a moment and leave a rating and review of this podcast on Apple Podcasts, Spotify, tune in, cast box, wherever you listen, it would be greatly appreciated.

I read them, other people read them and decide whether or not to listen. So it would help us if you would leave a rating and review. I'm Mike Carruthers. Thanks for listening today to something you should know. Every story eventually comes to an end.

Intel
This June, hear the final episode of season two of the hit podcast series in the Red Clay. Durham in the Red Clay tells the unbelievable true story of Billy Sunday Burt, the most dangerous man in Georgia history, in the podcast that people are calling riveting, incredibly moving, captivating, and addicting binge seasons one and two of in the red clay. Now, wherever you listen hey guys. Welcome to the Candy Valentino show. I'm Candy Valentino.

Mint Mobile
I was a founder before I could legally order a drink, and for more than two and a half decades, I've built, scaled, acquired, and exited multiple businesses in diverse industries. Now, my goal is to help you by sharing the knowledge that I've learned, the mistakes that I've made, and the wisdom that I've developed over my journey. Bi weekly episodes every Monday and Thursday. The Candy Valentino show. Wherever you listen.

Mike Carruthers
Wherever you listen.