Janet Napolitano Personifies US Myopia

Janet Napolitano is a former Attorney General, and later Governor, of Arizona. She’s currently the US Secretary for Homeland Security. Last week, she wrote a piece for Reuters that shows Ms. Napolitano has blinders on that are so thick, every American should fear her and all she represents and stands for. First, here’s what she wrote:

 

The urgent need to protect the global supply chain

 

Every day, staggering numbers of air, land and sea passengers, as well as millions of tons of cargo, move between nations. International trade and commerce has long driven the development of nations and provided unprecedented economic growth. Indeed, our future prosperity depends upon it.

 

At the same time, threats to trade and travel — whether from explosives hidden in a passenger’s clothing or inside a ship’s cargo, or from a natural disaster — remind us of the need for security and resilience within the global supply chain. 

 

For instance, just three days after the earthquake, tsunami and nuclear tragedies struck Japan last March, U.S. automakers began cutting shifts and idling some plants at home. In the days that followed, they did the same at their factories in more than 10 countries around the world.

 

Ten years after the terrorist attacks of Sept. 11, 2001, we [..] continue to see the determination of individuals and groups to disrupt economies by targeting our transit and cargo systems. Understanding the seriousness of these threats underscores the need for a continued focus on protecting the global supply chain.

 

Just as important, we must move away from the outdated dichotomy that we have to choose between trade and travel efficiency, and trade and travel security. Security and efficiency must no longer be seen as mutually exclusive. It is possible to enhance security without increasing wait times, creating more paperwork and driving costs higher – and we are doing so already.

 

As I announced at the World Economic Forum in Davos this week, the United States released a National Strategy for Global Supply Chain Security, the product of more than two years of collaboration across the U.S. government, and with international and domestic public and private partners.

 

The National Strategy, created with the input of more than 60 subject matter experts and hundreds of supply chain stakeholders, takes a whole-of-nation approach to global supply chain systems, with two explicit goals: promoting the efficient and secure movement of goods; and fostering resiliency.

 

 

Ms. Napolitano sees two threats to the global supply chain. Nature and terrorists (or she might think of it as God and terrorists, for all I know). She sees it as her task to protect Americans from the fall-out from both factors. This must be done by improving security and efficiency. A National Strategy is in the works. You just carry on!

 

What Napolitano doesn’t address at all, not with one single word, are the real threats to the global supply chain. Which makes the meaning of “Security” in Homeland Security doubtful at best.

 

First of all, the supply chain, of course, is its own threat. Carrying millions of megatons of “stuff” around the planet daily, that could just as well be made inside the countries that import it, is a crazy idea. It is possible only because transport is -artificially- kept dirt cheap. 

 

Which in turn is possible only because we discount a thousand externalities, like pollution from planes and trucks etc. that “serve the chain”, like rising domestic unemployment numbers in importing nations, like the collapse in domestic manufacturing capacity, like the often degrading working conditions for people oversees who produce “stuff” for citizens of richer nations, who themselves would never accept such conditions.

 

And, from a wider perspective, the fact that the citizens of these richer nations get poorer all the time precisely because they lose jobs and wages if and when others far away can be made to work for far less money. 

 

If you would buy “stuff” produced by you neighbor, (s)he would have a job, and be able to buy what you produce. Now that you don’t, you’ll both be either unemployed and/or work for much lower wages down the line. 

 

As for the knowledge economy idea we’ve been fed, look at unemployment numbers in the west: it doesn’t work. You’ve been fooled, punked, had. It only seemed to work for a while because we were all borrowing cheap money. Which leads straight to threat number two.

 

The second real threat to the global supply chain, one that also gets zero attention from Napolitano, is the credit crisis. She knows perfectly well that without sufficient credit, the supply chain will collapse. But she prefers instead to talk about terrorism, so you will too. Let’s pick an enemy that is not us.

 

There is hardly a single store in the western world, and hardly a single ship or truck, that can run for more than a few days without credit in one form or the other. Business loans, rolling business credit lines, letters of credit, everything is bought and guaranteed with borrowed “money”. When that disappears, most ships and trucks and stores will too. 

 

That credit is already disappearing, and it hasn’t even started for real yet. Just wait till the realization dawns that we cannot prop up every single bank and sovereign nation with central bank zombie money. That trying to do so seals the sorrowful fate of ourselves and future generations, condemning any and all to barrel scraping poverty.

 

In Europe and America, the hundreds of billions of dollars used to bail out anything deemed too big to fail, whether it’s Greece or Goldman Sachs, have already led to the first rounds of austerity. Many more, and far more severe ones, will certainly follow.

 

But that is not what Janet Napolitano thinks of when she contemplates threats to the global supply chain.

 

The third real threat is not on her radar either. The energy supplies needed to feed the global supply chain are subject to multiple severe strains. The availability of oil is the number one among them. Dwindling credit has already meant that Europe’s largest refinery firm, Petroplus, has filed for bankruptcy. 

 

Many more links in the chain are bound to fall prey to a lack of credit. Exploration, infrastructure maintenance, there are a lot of factors that will bite the resilience of the oil supply chain, and thereby the entire global economic supply chain, no matter how big a factor you think Peak Oil is. Even if there would be enough oil to carry on business as usual, it’s the business side of the equation itself that has moved “beyond usual”.

 

Hence: the chances that the oil supply will allow for things to continue as they were are rapidly dwindling. Oil could either become too scarce and therefore too expensive to maintain the global supply chain status quo, or we could all get so much poorer fast that we won’t be able to afford it at any reasonable price. If you have any money left, I’d put it all on the latter option.

 

And don’t forget that oil production doesn’t just have an economic price: it has an energy price as well. If it takes more energy to produce energy than you get back from it, you don’t have a net energy source. Hidden fuel subsidies and discounted externalities make for a picture on the topic that is as realistic as a children’s video game.

 

If Janet Napolitano were either smart, honest or on your side, let alone all three, she would have written a completely different article under the title The urgent need to protect the global supply chain. The fact that she has not should serve as yet another reminder of where Washington’s priorities lie.

 

If the US government were serious about protecting both the global supply chain and the American people, it would take measures to cut dependence on the chain, which is indeed under a lot of threats, albeit not primarily the ones Napolitano mentions. That is what Homeland Security should focus on. But with blinders the size of Napolitano’s, that is impossible. 

 

The only possible conclusion therefore is that it’s not a good idea to depend on Homeland Security for your security. Janet Napolitano is either very ignorant, or she willfully ignores the real threats. Which either makes her completely unfit to be Secretary for Homeland Security, or the ideal person for the job. It all depends on how you look at it, or what you wish to defend: your plush seat in society or the people’s access to energy and other goods and services. 

 

You can’t have both. Whether Napolitano understands this or not is really immaterial for you and me. She’s not in our corner, and that’s all we need to know. If she chooses to ignore the real threats to our lives, we heave no choice but to ignore her, and the entire system she represents.