When we wake up each morning we just expect that all of these things will work today the same way they worked yesterday. Very few have considered the complexity involved in the underlying infrastructure that keeps goods, services and commerce in America flowing. Fewer still have ever spent the time to contemplate the fragility of these systems or the consequences on food, water, health care, the financial system, and the economy if they are interrupted.

A report prepared for legislators and business leaders by the American Trucking Associations highlights just how critical our just-in-time inventory and delivery systems are, and assesses the impact on the general population in the event of an emergency or incident of national significance that disrupts the truck transportation systems which are responsible for carrying some ten billion tons of commodities and supplies across the United States each year.

A shut down of truck operations as a result of elevated threat levels, terrorist attacks, or pandemics would, according to the report, have “a swift and devastating impact on the food, healthcare, transportation, waste removal, retail, manufacturing, and financial sectors.”

So too would events such as an EMP attack or a coordinated cyber-attack that could shut down global positioning systems and the computers responsible for inventory control. Another potential scenario that is more likely now than ever before is liquidity problems within the financial system stemming from currency crisis or hyperinflation.

All of our just-in-time delivery systems are built upon the unhindered transfer of money and credit, but when credit flow becomes restricted or money becomes worthless, no one will be able to pay for their goods. Likewise, no one will trust the creditworthiness of anyone else. This is exactly the scenario playing out in Greece right now and the consequences on the health care industry in that country have left many without life saving drugs. When there’s no money, no one will be transporting anything.

The effects of a transportation shutdown for any reason would be immediate (in some cases, within hours) and absolutely catastrophic.

Excerpted from the American Truckers Associations report

Food

• Significant shortages will occur in as little as three days, especially for perishable items following a national emergency and a ban on truck traffic.

• Consumer fear and panic will exacerbate shortages. News of a truck stoppage—whether on the local level, state or regional level, or nationwide—will spur hoarding and drastic increases in consumer purchases of essential goods. Shortages will materialize quickly and could lead to civil unrest. (We’re seeing this in the UK right now)

Water

• Supplies of clean drinking water will run dry in two to four weeks. For safety and security reasons, most water supply plants maintain a larger inventory of supplies than the typical business. However, the amount of chemical storage varies significantly and is site specific. According to the Chlorine Institute, most water treatment facilities receive chlorine in cylinders that are delivered by motor carriers. On average, trucks deliver purification chemicals to water supply plants every seven to 14 days. Without these chemicals, water cannot be purified and made safe for drinking.

Health Care

• Without truck transportation, patient care within the truck stoppage zone will be immediately jeopardized. According to Cook, many hospitals have moved to a just-in-time inventory system. In fact, some work from a low-unit-of-measure system. This means that essential basic supplies, such as syringes and catheters, are not ordered until the supplies are depleted. These systems depend on trucks to deliver needed supplies within hours of order placement. Internal redistribution of supplies in hospitals could forestall a crisis for a short time; however, in a matter of hours, hospitals would be unable to supply critical patient care.

• If an incident of national significance produces mass injuries, truck transportation is the key to delivering urgently needed medical supplies necessary to save lives.

• Hospitals and nursing homes will exhaust food supplies in as little as 24 hours

• Pharmacy stocks of prescription drugs will be depleted quickly. According to the National Association of Chain Drug Stores, most of the nation’s 55,000 drug stores receive daily merchandise deliveries by truck.

Transportation

• Service station fuel supplies will start to run out in just one to two days. An average service station requires a delivery every 2.4 days. Based on these statistics, the busiest service stations could run out of fuel within hours of a truck stoppage, with the remaining stations following within one to two days

• Air, rail and maritime transportation will be disrupted.

• A fuel shortage will create secondary effects. Without access to automobile travel, people will be unable to get to work causing labor shortages and increased economic damage. Without cars, many people cannot access grocery stores, banks, doctors, and other daily needs. Public bus systems will cease to operate as well, preventing many disabled and elderly people from accessing these necessities. Without fuel, police, fire, rescue and other public service vehicles will be paralyzed, further jeopardizing public safety.

Waste Removal

• Within days of a truck stoppage, Americans will be literally buried in garbage with serious health and environmental consequences. Further, without fuel deliveries, many waste processing facilities will be unable to operate equipment such as backhoes and incinerators.

• Uncollected and deteriorating waste products create rich breeding grounds for microorganisms, insects, and other vermin. Hazardous materials and medical waste will introduce toxins as well as infectious diseases into living environments. Urban areas will, of course, be significantly impacted within just a couple of days.

Retail / Manufacturing / Economy

• Replenishment of goods will be disrupted. Many of the nation’s leading retailers rely on just-in-time delivery to keep inventory levels as low as possible. Similar to the low-unit-of-measure hospital inventory system, these stores rely on frequent deliveries to replenish basic goods. Often, delivery of a shipment is not triggered until the current inventory is nearly depleted. Without truck deliveries, retailers will be unable to restock goods, including consumer basics such as bottled water, canned goods, and paper products.

• Consumer behavior during emergencies triples the rate of inventory turn-over. Since many large retail outlets typically keep inventories as lean as possible, problems often arise quickly during truck transportation slowdowns that occur from crises such as hurricanes.

• Just-in-time manufacturers will shut down assembly lines within hours. Major American manufacturers, ranging from computer manufacturers such as Dell and Compaq to major automakers such as GM and Ford, rely on just-in-time manufacturing. Without truck deliveries, component shortages and manufacturing delays will develop within hours

Financial Sector

• ATM and branch bank cash resources will be exhausted quicky. In today’s fastpaced, high-technology economy, consumers access cash 24/7 from 370,000 ATMs nationwide. JP Morgan Chase, the nation’s second largest consumer bank, replenishes its 6,600 ATMs via armored truck delivery every two to three days. Given the increase in ATM activity that occurs before and after any type of crisis, ATMs would run out of cash much sooner.

• Small and medium-size businesses will lose access to cash.

• Regular bank functions will cease.

While an event that disrupts truck transportation systems may be unlikely, recent history suggests it is fully plausible and the blowback can be devastating. A day after Hurricane Katrina ravaged New Orleans, panicked government officials stopped all transportation flow into the region, forcing hundreds of trucks loaded with emergency supplies like food and water to wait for permission before they could enter the area. As a result, thousands of residents of the city were left without items essential for survival. It took days before truck routes were re-opened and supplies were allowed to flow. Government officials acting on limited information, lack of knowledge and personal politics were responsible for restricting the flow of goods into New Orleans, potentially killing hundreds of people in the process.

What this incident demonstrated is that when the trucks in America stop, all commerce and delivery stops with it.

Now consider what may happen if the emergency is more widespread, affecting not just a city, but the population of an entire region or the United States in its entirety.

Regards,

Mac Slavo

Just in Time: When the Trucks Stop, America Stops was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Let’s just start with the obvious thing: the food. It is, of course, wonderful and full of varied textures: crunchy shells, robust meat, cold and fresh lettuce, stringy cheese, and all the fatty stuff that we love because it both satisfies and gives us energy. It arrives quickly, and its ready to eat, mostly with your hands, which is really how we all want to eat.

The menu itself is an absolute blast. Should we get a dozen tacos, mix in a few steak burritos, throw in an enchirito or two, or just fill up on nachos? And what’s the deal with these prices? For $2 I can get just about any standard menu item. For $10 I can walk away with a case full for great stuff to share, or, better yet, munch on from breakfast through to the midnight snack.

But there’s more going on than just fun food. The company obviously puts a great deal of thought into the ethos of the restaurants themselves. The decor gives us things to look at that we don’t see anywhere else. The colors are all those we associate with the Southwest, but not in a conventional way. The shapes are geometric and modern, with a daring flare that delights the eye and fires up the imagination.

The details around the place add to the sense of adventure, but you don’t take note of them individually unless you are looking closely. The backs of the chairs all have a bell shape cut out in the steel. The lighting is not mainly in the ceiling but rather comes from orange hanging glass lamps in the shape of cones, and I was trying to think where I had seen this before. Is it like the knave of a chapel in a monastery in a Spanish mission territory? Maybe that’s it. I’m unsure but it conjures up something different.

Hold on here. Perhaps you have already realized this and I’m slow on the take, but the whole Taco Bell experience is suggestive of that Spanish mission sensibility. That’s why the buildings are shaped the way they are. And, obviously, that’s the whole meaning behind the bell, and why it adorns the front entrance of the place. It’s a church bell! It taps into something deep and lasting in our cultural sensibilities, something that shaped our ancestors and their communities, and presents it all anew in our times.

Have you seen the paintings on the wall? They are very peculiar and aggressive in their use of color and shape, kind of like the iconography of Latin America. Most seem to have some walking man or robot, abstractly designed but with sharp edges, and the words “Taco” and “Bell” appear somewhere on them. They are unframed, such as you might see in a gallery. I want to meet the person who put these together. He or she has talent, for sure, and I want to congratulate this person for using that talent in the service of the public good.

Next time you are there, take a close look at the gorgeous photography of the dishes themselves. There’s never been a prettier taco, never been a burrito that looks more exciting, much less a plate of nachos that seems as if every chip is practically dancing with joy at the prospect of being eaten.

Each image features a splashy use of color, depth, and action. How do you make food look this way? It’s must be a rare skill. I could take pictures of tacos with my iPhone all day and never get one to look presentable by comparison.

Now, the usual response is to point out that the food doesn’t actually look this way once it arrives on your plate. No kidding! But does anyone really care? Not really. The point of the images is to get you in the mood to eat the thing, rev you up into the spirit of the moment, create that deep sense of longing for the real deal.

You don’t feel a bit of disappointment when the food doesn’t look like the picture, and why? Because you can’t eat a picture. And the food is right there in front of you ready to be eaten. Part of Taco Bell’s secret must be that it makes its images so ridiculously unrealistic that you sound like an idiot to point it out.

This restaurant came into existence in 1946 and really caught its stride in the 1990s. It’s another reason we are all fortunate to live in our times, right now.

Go ahead and dismiss that statement as hyperbole if you want to. But I seriously submit to you if you had dropped this restaurant on any spot on the planet before about 1940, to say nothing of 1200 or 1000BC, all the people would have been in profound awe and regarded it as a sector of heaven that had somehow dropped from the sky. There weren’t enough travelers and traders alive to make it possible much less affordable.

This is the free market at work. It has gathered corn, flour, beans, tomatoes, meat, and fresh lettuce from all the ends of the earth, combined it with advanced kitchen technology, added experienced management, brilliant entrepreneurship, and a service ethic to give us something more wonderful than that the teller of tales of yesteryear could have ever dreamed up in his wildest imaginings.

It’s inconceivable to me that a small group of parasitic activists could have targeted this place for destruction. But that’s what they did a few year’s ago with the lawsuit against Taco Bell. They claimed that Taco Bell was not serving 100% beef in its tacos. Of course the organized left rallied around this lawsuit, a fact which confuses me because you would think that they would be glad that the company doesn’t serve 100% beef. They hate the cow for its demand for vast pasture land on which to graze and even its biological functioning which alleges adds to the “problem” of climate change.

The whole hysteria was like a joke. Of course Taco Bell adds stuff to its beef to make the final product. So do you when you make tacos at home. At least I hope so. You drain the fat and add spices and flour and other things to turn it into the right texture for eating. I don’t see the big deal. But the activists were so desperate to destroy this place that they acted like this company, which is all about service, was somehow guilty of mass fraud.

The news media jumped on the campaign in hopes of giving Taco Bell a bad name. The response by the company was brilliant. It added a whole new series of menu items not based on hamburger but on sliced up steak. These are the most expensive items on the menu. So now you go in with the intention of spending $3 and instead spend $7 or more! Good for Taco Bell.

Even better, after the dopes withdrew their silly lawsuit, Taco Bell launched a nationwide advertising campaign with the slogan: “Would it kill you to say you’re sorry?”

Fantastic!

The genius of capitalism is that it always ends up outwitting its opponents, whether they are central planners and regulators or crazed activists armed with lawsuits. But capitalism is not just an anonymous, nameless, faceless force operating in the universe. It is flesh, blood, and brains dedicated to serving humanity at a profit and always through voluntary means. The owners and workers at every one of its 5,800 restaurants deserve our admiration and thanks.

Regards,

Jeffrey Tucker

How We Adore Taco Bell was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

The story revolved around the town of Lac-Etchemin, Quebec, which prided itself on being the first Canadian municipality to ban “unhealthy” food from its arena. “Now, in an admission that paninis are outmatched against poutine, the town council has lifted the ban and french fries will return before the end of the month.”

You might chortle at the hubris of a Quebec town trying to ban the delicious French Canadian staple of french fries laden with cheese curds and smothered in gravy. You should applaud the victory of rebellious Canadiens against the Nanny State municipality. In doing so, however, it is important to realize that the attempted ban is neither humorous nor trivial. It is merely one instance of government’s creeping encroachment into what goes onto your dinner plate. In the ’80s, people protested under the slogan “Get government out of the bedroom,” meaning that the state had no proper business monitoring or punishing the consenting sexual choices of adults. Today, the protest should read “Get government out of the kitchen.”

FOOD AS SELF-EXPRESSION

The governmental censoring of food choice is often viewed as a trivial, or even benevolent, matter. After all, what is one french fry more or less? And the goal as stated seems well-intentioned.

There is nothing benevolent, however, about state-imposed control over one of the main ways in which human beings express themselves. Food choices are personal; they define our identity as surely as our choices in attire or reading material. “Food is love” is a hackneyed saying that conveys the basic truth that eating is about far, far more than sustaining life.

Food is an integral aspect of transmitting culture and ethnicity. From Italian pastas to Indian curries, from poutine to falafels, a rich array of dishes form a part of your family’s history and the background of who you are. Often the mere smell of a dish as you walk by a restaurant can elicit a flood of childhood memories, including how recipes or cooking techniques were passed down from one generation to the next.

Food is also a form of cultural exchange through which diverse ethnic groups can automatically appreciate each other’s heritage. The appreciation happens spontaneously, without tax funding, laws or government programs. It happens every time someone chooses a Chinese restaurant or expresses preference for a Jewish deli. During World War II, sauerkraut was widely banned in North America as “unpatriotic” because of the deep hostility toward anything German. Equally, the approval of ethnic food is a form of acceptance of a culture, or at least one significant aspect of it.

Food is also a moral choice, as every vegan knows. It is a religious choice, as Orthodox Jews will attest. Food is also a political statement, as any farmer who produces raw milk will tell you.

One of the most important functions of food choice returns to the saying “Food is love.” When a spouse or mother celebrates your birthday, it is through making “a favorite meal” or baking a cake. When a man proposes, it is over a romantic meal at an expensive restaurant. When you express sympathy at a post-funeral gathering, you do so while holding a casserole that you’ve brought over. It is commonplace for those who are emotionally distressed to seek “comfort food” that allows them to “feed themselves” when the world is not. How many women have recovered from a broken heart over tubs of ice cream?

Precisely because of its strong emotional pull and roots in culture, food choice has become one of the most important rituals in our society. From Thanksgiving to Christmas, from Halloween candy to chocolates on Valentine’s Day, food and ritual are inextricably linked.

Ultimately, food is also one of the main forms of self-control you exercise over your own body. Through these choices, you express a personal judgment on what benefits your body and/or fits your lifestyle; for some, the judgment leads to an Atkins diet, while for others, it is organic lentils. Even people who make allegedly ‘bad’ choices are expressing themselves.

The bounty and diversity of food available in every grocery store and on each passing street corner should cause joy because it demonstrates the richness of society itself — not merely in terms of prosperity, but also in terms of choice.

Thus, when government dictates what you may or may not eat, it is restricting your heritage, your religious and political choices, the control over your own body, telling you that a choice every bit as personal as freedom of speech or the art you view is not yours to make. That decision is theirs.

Why? For your own good. Even as an adult, you cannot be trusted with choosing the food that goes into your own mouth at your own expense. That’s what government experts are for.

ARE THE EXPERTS CORRECT?

Politically speaking, it does not matter whether the food “experts” are correct about poutine any more than their opinion on a specific work of literature should matter…at least politically speaking. You have an inalienable right to read graphic novels about a dystopian future rather than be force-fed Ibsen’s writings on dysfunctional families. You have a similar right to eat food bought at your own expense.

Nevertheless, almost all discussion of government’s censorship of food choice revolves around whether or not the claims being made are true or false. This would be a fascinating and valuable discussion if it did not always seem to end at the conclusion “There ought to be a law.” Thus, otherwise interesting discussions about the value and risks of raw milk result in farmers being arrested and driven out of business by huge fines. Otherwise interesting discussions about the calorie count or artery impact of poutine end in the banning of a cultural choice. This is akin to banning literature because a government book reviewer finds the contents to be “unhealthy.” Society should cease to have discussions that end in such conclusions.

Those who are in the “there ought not to be a law” camp often encounter the following argument: We live in a society that offers (to varying degrees) free health care. This means that taxpayers bear the consequences of providing health care to those who are reckless with their bodies through drugs, alcohol, smoking or unhealthy diets. In short, your neighbor has a vested and financial interest in what goes into your body.

This line of reasoning — rather than justifying a Nanny State or a nosy neighbor dictating your personal choices — constitutes a powerful argument against socialized medicine. If socialized medicine had been “advertised” decades ago as a government mandate to control the minutia of your daily life, then it would probably have never been implemented. If socialized medicine had announced itself as the right to usurp parental control over what to feed children, then it would have met the same “rink-revolt” that occurred in Lac-Etchemin.

Tell the government that it is not a welcomed guest in your kitchen. There is no room for bureaucrats at your dinner table.

Regards,

Wendy McElroy

All Power to the Poutine! was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Eddie Cantor (1892-1964) was a comedian, singer, songwriter and actor. “Banjo Eyes,” as he was sometimes called, was also the author of two little books on the Great Depression. “People used to rob banks,” he writes in Yoo-Hoo Prosperity. “Now we’re lucky when it isn’t vice versa.” Cantor jokes about many troubles in the Great Depression, but one recurring theme is the relative lack of food.

A millionaire is “one who eats three square meals a day.” Things were so bad that “the pigeons are now feeding the people.” They were funny lines…sort of. For many of the people living during those times, Cantor’s jokes were not so far from the truth.

We have it comparatively easy in this, the crisis of 2008. We may have to make do with fewer Swatch watches and Coach handbags. We may have to pass on the latest iPod and make do with last year’s winter coat. These hardships are not important, except for people selling those goods. But the credit crisis is also affecting the world’s ability to produce one thing important to everyone: food.

It’s harder for farmers to get credit for next season’s crop, especially farmers overseas. They need fertilizer, seed, fuel and more. And most farmers need to borrow money to obtain these essential items. No credit; no crops.

Therefore, the global credit squeeze might reduce plantings of key grains, even as world inventories of these grains hover near historic lows. In Russia, for example, cash-starved banks have cut off funding for the industry. The head of the Russian Grain Union says, “Many farmers probably won’t be able to borrow money for the spring sowing.” This is important because Russia is no lightweight in the grain division. It produces 9% of the world’s wheat, for instance. No surprise that the United Nations considers Russia a critical component of the global food supply.

Ironically, Russia just had its best harvest ever. And still, global grain inventories remain low. Bloomberg reports that global inventories of corn, wheat and soybeans are the second lowest they’ve ever been since 1974.

A number of countries already fear what might happen next year. The Washington Post Foreign Service in Shanghai reports that China adopted a number of measures to protect itself from the worsening food crisis: “Among the most extreme measures [China] took was to impose new export taxes to keep critical supplies such as grains and fertilizers from leaving the country.”

These taxes are extremely high, on the order of 150%-185%. China worries that richer countries may outbid its own farmers for supplies and weaken China’s own food supply. One Chinese fertilizer company, which produces 150,000 tons per year, already said that the new taxes mean exporting is no longer profitable. China was the biggest exporter of certain types of fertilizer. No longer. That’s a lot of supply off the market.

Fertilizers are absolutely critical in maintaining (and improving) crop yields. Without them, we’d produce far less per acre. As a result, in parts of Africa where people depend on Chinese fertilizers, the food supply problem is now more acute. China’s export taxes and bans follow those of other grain producers, including the Ukraine, India, Pakistan and Argentina.

Amazingly, despite these various maneuvers around the world to prevent grain exports, the prices for wheat, corn and soybeans are all half of their mid-summer highs. It seems the market believes a global recession will dampen demand. Maybe so, or maybe the market doesn’t know anything. The severe commodity selloff during the last few weeks might be saying a lot more about the desperation of hedge fund managers to raise cash than about the prospect that grain demand will fall – in which case, we could see another surge in prices next year.

Demand for grains is still very strong. In China, each wage-earner devotes about 40 cents of every dollar earned to buying food. In India, that number is a staggering 70 cents out of every dollar earned. In other words, the food budget in these countries is hardly a discretionary item. It will remain constant, or even rise, no matter what the global economy does.

Meanwhile, the people in these countries who have a couple of extra rupees to toss around are upping their consumption of meats, which increases the per capita demand for grains. As PotashCorp chief William Doyle recently pointed out: “The average daily protein intake in China has increased by 40% over a 20-year period, with the greatest percentage of that increase coming from meat consumption.” You can see it in the size of the people themselves: The average 6-year-old Chinese boy is 12 pounds heavier and 2 inches taller than 30 years ago. These people aren’t going back to the ways thing were. This is a long-term story, and these trends should continue.

Yet even if demand growth for grains slows, it’s not likely that those low global grain inventories will improve. Even if grain demand fell to 2% per year, we’d still need record production to keep grain inventories from falling further.

For all these reasons, I think the future is still bright for agriculture and all that it entails. I think the fertilizer companies look cheap again. In my monthly newsletter, Capital & Crisis, my subscribers owned Agrium (NYSE: AGU) for nearly three years, and it more than tripled our money. The stock is now a good one-third below what we bought it for initially.

PotashCorp (NYSE: POT) and Mosaic (NYSE: MOS) are other names I’m looking at hard right now – both have been crushed in this troubled market.

Beyond that, irrigation companies have come way down, even after posting outstanding results. Lindsay (NYSE: LNN) and Valmont (NYSE: VMI) are two irrigation equipment makers, for example, both coming off great quarterly results.

In 1931, Eddie Cantor wrote that the biggest thing in years was bread. “Why, they’re giving it away free! Whenever four men get together at a street corner, it used to be a merger,” he writes. “Now it’s a bread line!” It’s funny now. Next year, it might not be, at least to some.

Regards,
Chris Mayer

December 03, 2008

Crash in Food Supply was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.