December 12, 2024 • 35 mins
For our December episode, co-hosts Ted Stank and Tom Goldsby spoke with Marianne Wanamaker, dean of UT's Howard H. Baker Jr. School of Public Policy and Public Affairs and a professor of economics and public policy.
Wanamaker, who served as the chief domestic economist for the White House Council of Economic Advisors during the first Trump administration, is a recurring guest on the podcast and at meetings of the GSCI Advisory Board, where executives look to her for insights into the U.S. labor market.
In our final recording of 2024, she addressed the U.S. presidential election, the threat of tariffs and inflation, the negotiating tactics of president-elect Donald Trump, business relationships with Mexico and China, immigration, and much more.
The episode was recorded virtually on December 3, 2024.
Related links:
- November Logistics Manager’s Index shows continued growth
- Discounts and deals led to a Black Friday and Cyber Monday that exceeded expectations
- Farm industry warns Trump’s deportation plans could upend food supply
- What the last Trump tariffs did per experts
- Is the U.S. national debt of $35 trillion putting global economy at risk?
- Read our latest white paper, "Unlocking the Potential of the Gen XYZ Labor Force," released at the forum.
- Listen to previous episodes featuring Wanamaker in December 2021, March 2022, and July 2022.
- Wanamaker on the future of the supply chain workforce for Zero100 podcast
- Save the Date for the April 2025 Supply Chain Forum, April 8–10 in Knoxville
- Become a Supply Chain Forum member
- Subscribe to GSCI’s monthly newsletter
- Read the latest news and insights from GSCI
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Introduction & Outro (00:00):
Welcome to the Tennessee on Supply Chain
Management podcast.
Listen in as co-hosts Ted Stankand Tom Goldsby set sail into
the world of end-to-end supplychain management, diving deep
into today's most relevantbusiness topics.
They'll share insights inpressing industry issues and
tackle the challenges keepingsupply chain professionals up at
night.
If you're enjoying the ride,download and subscribe to
(00:22):
Tennessee on Supply ChainManagement on your favorite
podcast platform now.
Tom Goldsby (00:27):
Hello and welcome to the Tennessee on Supply Chain
Management podcast.
I'm your co-host, Tom Goldsby,coming to you from Rocky Top,
Knoxville, Tennessee, anddelighted to be joined by my
good friend and colleague, DrTed Stank.
Hey, Ted, how you doing.
Ted Stank (00:43):
Tom, how you doing.
I'm joining you from oursatellite campus in Beaufort,
North Carolina.
I'll be back with you laterthis week to get all of our
executive graduate programsgraduated and out of here by
December 13th.
Tom Goldsby (00:57):
Wow, exciting times .
You know all this hecticactivity.
I know we're wrapping upbusiness for the semester.
Right about now, in fact, I hadmy last live class session of
the semester.
I wouldn't say that all 768students showed up to their
intro to supply chain managementclass, but it was a good share
of them and they were allwanting to know what's going to
(01:18):
be on next week's exam and Ihave to say I dropped a few
hints, but not full disclosureby any means.
Ted Stank (01:28):
I thought you were going to say that of your live
class.
Tom Goldsby (01:29):
Not all of them were actually alive.
Well, that's another story.
In fact, I did throw a questionout to them about a month ago.
You know, we're kind of in thedoldrums of early November.
We're running on fumes at thispoint and I did actually say,
hey, would you do me a favor,put a couple of fingers up to
your throat and just tell me ifyou feel anything?
And I don't know, I think thatgot it, made him a little angry,
(01:52):
which was part of my point,sparked a little energy in them.
But anyway, we're kind of inthose, those final hours of the
semester.
We're putting the wraps onleadership academies, right, ted
, and a lot of activity going onhere on campus.
Absolutely, these are a hecticcouple of weeks and we're just
waiting to see who we're goingto play in our first ever
(02:13):
playoff football game too.
So that should be announcedlater today.
I think that we need toprobably have a little
conversation, but I just don'tthink we should keep our guests
on the sidelines for very long.
What do you think?
Ted Stank (02:26):
Yeah, the guest that we have today is not a sidelines
player.
She is absolutely a starterthat needs to get as much
playing time as possible.
Tom Goldsby (02:34):
Certainly Well, marianne Wanamaker is the Dean
of the Baker School of PublicPolicy, a professor of economics
in the Haslam College ofBusiness and a frequent flyer
when it comes to the Tennesseeon Supply Chain Management
podcast Back by Popular Demand.
It's been a while, marianne,since you've been with us.
Welcome yeah.
Marianne Wanamaker (02:52):
I don't know what y'all have been doing over
here without me.
Tom Goldsby (02:55):
Well, our ratings have plummeted, so we realized
we needed to bring you back inthe mix and we'll see if you are
the catalyst that we think youare.
But welcome to the show.
And of course, you know we'reon the far side of an election,
a big, big election, and I thinkthat's going to be a primary
topic of conversation.
Everyone's speculating on whatthe new administration the new
(03:16):
old administration, if we'regoing to call them that will
have in store for us.
A lot of talk of tariffs andimmigration policies and all
that stuff, and we willcertainly get to it.
But, Ted, I want to throw yousomething first.
Within the logistics and supplychain space, we always keep a
close eye on the LogisticsManager Index and I think you
caught a glimpse of that thismorning and I'll have to admit I
(03:37):
missed it.
My apologies to the Rogersbrothers who put that out Dale
and Zach Rogers, father-son duo,actually.
But, Ted, what's the read fromDale and Zach on the LMI?
Ted Stank (03:47):
Yeah, the November index just came out and for
those of you who don't know andwe had Dale and Zach on a few
months ago the LogisticsManagers Index is an assessment
of logistics managers to get asense from them on what's going
on in transportation,warehousing, inventory et cetera
, whether things are inexpansion mode or shrinking.
It's kind of perceived to be alead indicator of economic
(04:10):
activity because if we don'thave inventory then that's the
expectation that sales are goingto be low and things like that.
The index for November wasstill pretty hot.
It was 58.4, anything abovea 50is in expansion territory, a
little bit cooler than October.
But October frankly, was thehottest since September of 22
when we were kind of coming outof the COVID doldrums.
(04:32):
Some really interesting readings.
Inventory was down a bit andthey're tracking that as all the
stocking up that we did duringthe summer as an early holiday
stock up period because of fearsof port strikes and tariffs and
excess costs in maritimeshipping.
So inventory is coming down alittle bit.
We can talk more later aboutwhat the retail holiday was like
(04:54):
over the last several days butin general things are looking
pretty hot from logisticsmanagers, which means
warehousing prices are up,capacity is down, transportation
, pricing up, all those kinds ofthings.
Tom Goldsby (05:06):
Well, cyber Monday, just to put a little timestamp
on where we are actually, it'sGiving Tuesday today, I believe
December 3.
And yesterday was Cyber Mondayand I think they were expecting
big things.
From first reads, it soundslike Friday was a really big
Black Friday and things aregoing pretty robustly in retail.
So we need our supply chains tobe performing at a high level.
(05:29):
Make sure those shelves arestocked and those fulfillment
centers are ready to ship.
Ted Stank (05:35):
Yeah, latest I saw was that the retail holiday was
about a 5% increase over lastyear, which is a good sign.
A lot of interesting thingsunderneath that number, like who
were the winners and losers,and, from what I've been hearing
, it's mainly discounters thathave really won, that consumers
were being very price sensitiveabout where they went to shop.
That being said, we spent 5%more than we spent last year.
(05:57):
So in an environment whereconsumer confidence is always a
little bit iffy, consumers arestill spending.
Tom Goldsby (06:03):
Well for sure, and this is such a terrible label to
put on anyone or anything.
But speaking of losers, PatGelsinger is out at Intel Don't
know if you saw that, but in thelast few days, forced out by
the board and I guess hisrecovery administration kind of
heading out the doors throwingmoney out.
I think TSMC got $6.6 billionabout 10 days ago and then more
(06:24):
money's heading to Ukraine, Ithink $700 million just
announced, and so a lot ofspending going on to try to keep
those initiatives, I guess,moving in the direction of that
(06:44):
administration.
Ted Stank (06:45):
But hey, Tom, we're playing defense here a little
bit.
We just said that we were goingto get the offense on.
Tom Goldsby (06:50):
Let's go.
Ted Stank (06:51):
Let's get Marianne Wanamaker to join us.
Marianne, a lot of what hashappened over the last couple of
months was speculation aboutwhat was going to happen with
our big national elections onNovember 5th.
There was so much uncertainty.
I haven't read a lot of thekind of after action reports
about why the polls were not asaccurate as they could have been
(07:12):
.
I know a lot of people saidthat it was kind of a toss up
election and when we all woke upon the 6th it didn't seem to be
much of a toss up at all, withDonald Trump seizing his second
presidency as well asrecapturing Senate with a GOP
majority.
So I'd love to get your take onsome of the prospective policy
(07:33):
issues that this newadministration is going to put
into place that will impact usin supply chain management.
Marianne Wanamaker (07:39):
Well, again, thanks for having me.
It's fun to be here again, andsomeone described it to me the
day after the election as anarrow blowout that stuck with
me.
I think that's a reallyaccurate way of thinking about
that election, like, yes, we allwoke up the next day and it was
clear.
I was up at 430 in the morningto do local TV and on my way to
the local station that calledthe whole thing.
So I wasn't expecting that.
(08:00):
I think it was surprising to us, but it still was not.
The swing states were stillswing states and those margins
were still relatively narrow,and so there still appears to be
a large section of Americanswho are persuadable to either
side, republican or Democrat andthat's the way it's supposed to
work.
So you know, from myperspective, I think it's just a
really healthy outcome.
So I mean, I'm not going totell you anything you don't know
(08:23):
.
The big issues facing the Trumpadministration are taxes,
tariffs, the national debt,inflation.
I mean, it's pretty standardset and in many ways, I will say
that it feels a lot like 2016.
Coming in in 2016, the Trumpadministration was really
focused on tax reform.
The tick-to-toe stuff thathappened in the fall of 2017 was
(08:46):
teed up in the election, andthen there was, of course, a ton
of work on trade, to someextent, immigration although I
would call what happened in the2016 election to be more about
the border than immigration.
We can talk about thedifference in those two things,
and so those are the same issuesthis administration is facing.
I mean, they've got all thesenational security, foreign
(09:06):
affairs issues as well, but theimmediate issues that that White
House will have to face arearound number one tax reform.
A bunch of stuff is sunsetting.
They've got to decide reallyquickly what they want to do
about it.
And then they've got.
They've promised the Americanpeople they're going to do
something about tariffs, andthey promised they're going to
do something about the borderand immigration.
This time, you know, a littlebit of a rerun.
(09:29):
I've seen this show before.
Ted Stank (09:30):
In some ways, so let's kind of start peeling the
onion here a little bit andreally talking about a few of
those issues that you touched onthat have major implications
for supply chain managers, thefirst one being tariffs and
trade.
Obviously, there's been a lotof headlines in the last week
about a 25% tariff on Mexico andCanada unless they can make
(09:52):
some progress on immigration.
An additional 10% on Chineseimports.
A lot of uncertainty aboutwhat's going to happen with
European and our partners in theEU.
So let's talk tariffs and tradefor a little bit.
First and again, we're in adifferent place from 2016 in
that China is not our number onetrade partner right now.
There has been movement awayfrom China significantly,
(10:15):
although China is still massive.
Marianne Wanamaker (10:18):
Yeah, and most of those places move their
stuff to Mexico, right.
So I actually think in theelection itself, in the campaign
, in the conversation abouttariffs, as people were trying
to critique the strategy, thetool they were using was largely
about inflation, right, like,okay, if you add all these
tariffs, you're going to raiseinflation and that seems
(10:38):
counterproductive and I thinkthat missed the mark then and it
really misses the mark now.
The thing that the tariffs donow, or the threat of tariffs do
now, is just generatesuncertainty.
Uncertainty is a killer forcapital investment now, both
domestically and abroad.
So I don't think that theintroduction of special tariffs
(11:01):
on Mexico and Canada has madeany company more likely to cite
something in the United Statesthan they were on November 5th,
because what it has revealed isa little bit of erraticism that
makes people really nervousabout citing things anywhere
domestically, abroad, becauseyou don't know to your point
this is your territory.
You don't know where the supplychain is for the thing you're
(11:21):
thinking about establishing inthe US.
So you don't want to establishit when you don't know what the
status of Mexico is, Right.
So I just think the whole thingto me right now that is a
conversation about uncertaintymore than it is about prices for
Americans.
Ted Stank (11:34):
OK, interesting, because I've always heard that
counter argument about well, ifwe raise tariffs, then companies
are just naturally going toraise their prices to cover
those tariffs.
Marianne Wanamaker (11:43):
So I don't think that's.
The primary impact for theAmerican economy is all the
stuff that's tied down,certainly.
Ted Stank (11:49):
So, Marianne, you had an insider's view during the
last Trump administration bybeing part of the President's
Economic Council, for was it twoyears that you were on the
council?
One year 364 days for taxpurposes.
Okay, you know President Trumpis renowned for being a master
negotiator.
In fact, he wrote a book on itcalled the Art of the Deal.
Right, how much of this do youthink is posturing on his part,
(12:12):
particularly with Canada andMexico, to get down and sit down
at the table and work onanother part of the onion,
immigration?
Marianne Wanamaker (12:19):
Yeah, I do think that it's become clear
what that strategy is and whatit looks like.
I think the fact that you sawthe Canadian Prime Minister fly
to Mar-a-Lago this weekend ispretty good evidence that that
is what the tool is for.
And yet if you talk to businessowners, they don't think that
enough to have confidence aboutwhat the supply chain from
Mexico might look like in sixmonths.
(12:41):
So, yes, it's probably anegotiating tactic, but it's not
so much of a negotiating tacticthat people don't think there
might be some real implicationsand need to plan for that.
And you know, I do think wetalked about this in our
pre-show discussion.
Like, I do think that theeconomic team that this
administration has assembledthus far and named thus far very
(13:02):
classical team with classicalinstincts and tendencies, the
kind of true believers ontariffs and tariff policy
haven't been named to anyofficial position.
That doesn't mean they don'thave influence.
It doesn't mean they're notwhispering in the president's
ear, but they're not heading NEC, they're not at Treasury,
(13:23):
they're not at Commerce, so youdo have a more traditional group
in place.
So if you're a traditionaliston economic policy, that's good
news for you.
Ted Stank (13:32):
Can you explain that to us truckers?
Does that mean a differentperspective on monetary policy?
Marianne Wanamaker (13:38):
Well, I think it means a more
traditional Republican view onfree markets.
Free markets win the day.
Ted Stank (13:44):
Okay.
Marianne Wanamaker (13:44):
And so all else equal lower government
taxes, more trade.
That immigration although it isnot currently functioning very
well, that immigration iscritical to our success.
Those voices are going to be inthe room, and that's my
takeaway from the appointmentsthat have been made so far, or
the intended appointments thathave been made so far.
Ted Stank (14:06):
That's very interesting yeah.
Tom Goldsby (14:07):
Thanks for that inside track and I guess we're
at about T minus 50 days beforeinauguration day.
And, ted, would you agree thatit seems like businesses with
which we engage they're justtrying to make sense and
speculate and enter into thescenario planning a bit?
Again to your question earlieris it posturing, as you pointed,
(14:28):
or is there going to be somereal substance?
And I think that's kind ofwhere we are.
I remember doing surveys backin 2018, 2019, about how
companies were dealing with thetariffs that were implemented in
the first Trump administration,and the most common response
was wait it out, and the premisewas we're not going to do
anything.
We might have a China plus oneif we can go to Vietnam or
(14:51):
Cambodia or what have you, justto kind of diversify the
portfolio a little bit.
But they still kept a prettyfirm footing in China.
They just diversified a littlebit and then, lo and behold, the
Biden administration comes inand they maintain the tariffs
and so it seems like the waitedout they're still waiting it out
from 2018.
Marianne Wanamaker (15:10):
So now I'm going to ask you a question.
So what had more of an impacton people's decision making?
Was it the trade policy of theBiden administration and the
Trump administration, so thetariff policy, or was it the
COVID impacts in specificcountries, like which of those
has been bigger in people'sdecision-making frames?
Ted Stank (15:28):
I think they were complementary, and we've been
talking supply chain managershave been talking for a long,
long time, at least since theearly 2010s about whether it was
sound strategy to have most ofyour eggs in the basket of one
country that, arguably, is thebiggest competitor of the first
half of the 21st centuryeconomically of ours.
(15:50):
And I think that thinking wasaccelerated by the first Trump
administration's tariff policies, and I think a lot of companies
were already thinking thenabout, hey, we need to start
finding alternative places, theChina plus kind of mentality
that Tom mentioned.
And then COVID came along andreally kicked that trend in the
butt.
I think people really realizedand CFOs realized we needed to
(16:14):
find other alternative sourcesto China, because if that spigot
got shut off whether it's forgeopolitical purposes, policy
purposes or global pandemicpurposes we couldn't have all
our eggs in that China basket.
Tom Goldsby (16:28):
Yeah, I would double down on that.
It was lead time and, worse,lead time variation.
Right, as I tell my students,the mean is mean but the
variation is meaner.
And you know, when you couldbank on four weeks transit time
Shanghai to Knoxville, that'sfine, We'll plan on that.
But when it's four weeks plusthree, four, eight weeks, what
(16:49):
have you?
That was the real killer.
Right, and 10,000 mile longsupply chains, I think.
And hence JIT got thrown over,you know, raked over the coals
and I think, more than anything,we largely absorb the tariffs
without any real.
I mean we weren't talking aboutinflation in 2018, 2019, 2020.
I mean, we weren't talkingabout inflation in 2018, 2019,
(17:10):
2020.
It was when we had the supplychain surge in demand, with
handicapped supply chains, wheninflation soared on us.
And you know I'm an econundergrad, so now it's time to
be set straight by the econ PhD.
Marianne Wanamaker (17:21):
What do you think, marianne?
Well, you know it's funny youmentioned inflation because,
like, if you read some of thiscriticism of the Trump
administration's tariff policies, what people will say is, like,
oh my gosh, this is going tofuel inflation.
We might get another percentagepoint on inflation.
Well, true, okay, but thinkabout what inflation is.
It's an ongoing rate of change.
So if the Trump administrationadds tariffs to everything
(17:43):
coming in from China, what was$100 is now $125.
That's a one-time increase inthe price, but it doesn't come
back next year, right?
So, like, it fuels inflationone time.
So can this country survive anincrease in inflation for one
year from what would have been2.3 percent to 3.3 percent and
(18:03):
then the year after that it goesback to 2.3 percent?
Absolutely.
So there's just to me thatincriminating evidence on this
is not great.
Policy isn't about inflation,it's just not that big of a deal
.
But it is about people'sinvestments and the way they
behave and the rearranging ofall the stuff y'all deal with.
And when people think, oh, I'mgoing to move it out of China
(18:25):
and one place, I might move itin Mexico, and then Mexico all
of a sudden is on the bad list,it makes it very hard to plan.
I was telling somebody theother day, like we just need a
country that's close to us,where no one would ever, ever,
ever want to leave that countryand come here, where we can site
some production facilities.
Where could that be?
(18:45):
It's not Canada, apparently.
Right, we need a country likethat, that is no immigration
threat and we're super close tous and we know exactly how long
it's going to take to get theship from there to here.
Ted Stank (18:56):
And you know the trend if you follow far direct
investment trends.
Over the last six, seven, eightyears it's so much of it has
gone to Mexico.
Mexico has seen a hundredspercentage increase in foreign
direct investment, much of itfrom Chinese companies, by the
way.
But I mean, I got to believethat Mexico is still going to be
the big winner of a China pluspolicy, at least for access to
(19:18):
the US Canadian markets.
Tom Goldsby (19:21):
Well, to that point earlier, right, I mean, if
10,000 miles is too far, howabout 100?
What about a thousand?
Right, right?
Ted Stank (19:28):
And not having to cross an ocean and go through
port and put it on rail.
And I do think it isintricately tied to immigration
policy.
Marianne Wanamaker (19:36):
It is.
The other thing I wanted topoint out is the fact that the
Biden administration didn'tchange the tariffs on China.
I think one way to read that isthat China is a country over
which we have very little power,right, I mean put it in the
category of Russia.
You can say whatever you wantin Washington, you can do
whatever you want.
Your ability to affect a changein behavior and the leadership
(19:58):
of that country is basicallyzero.
So you put the tariff on, youask for some change in behavior.
You're not going to get it, soyou can't take it off.
Mexico and Canada are not inthat category.
Those are countries where wehave a lot of potential to
change behavior.
The same is true for anycountry who we count on to be an
(20:19):
ally In Europe.
That's true.
So it's a different game, Ithink, when you're playing it
with an ally and a friend thanif you're playing it with an
adversary, and we need to kindof keep that in mind.
Ted Stank (20:28):
Yeah, marianne, can we pivot a little bit to this
immigration issue?
You know there was a lot ofconversation about a pretty
sound what most experts that Iknow and I'm no expert on it,
but most experts that I knowthought was a pretty sound
immigration bill coming throughCongress a year or two ago that
got voted down in the House.
Now that the GOP controls bothchambers of Congress, do you see
(20:54):
a similar immigration billcoming through that looks like
that one that actually getspassed this time?
Because another major thingabout policy for supply chain
managers is labor and theavailability of labor, and
particularly in warehouses andin some light manufacturing, et
cetera, immigration is reallyimportant to the availability of
labor and particularly inwarehouses and in some light
manufacturing, et cetera,immigration is really important
to the availability of labor.
In fact, I heard a statistic atour supply chain forum a couple
(21:17):
of weeks ago that today youcould probably correct us on
this, but today for every fivejobs there's four employees
available for that job.
That if we have massdeportation, that may be three
employees for every job.
What's your take on all that?
Marianne Wanamaker (21:32):
Yeah, well, here's another statistic for you
85% of the workforce growth inthe United States last year came
from immigrants 85%.
We are close to 100% dependenton immigration to drive growth
in workforce.
When we try to pretend thatthat's not true, we do ourself a
disservice.
I don't think any immigrationbill is moving anywhere in
(21:52):
Washington DC withoutpresidential support.
No matter who's in the office.
If you don't have the presidentbehind your immigration bill,
you are not going to go out on alimb for it, because that means
you got to have veto-proofmaturities in the.
House and the Senate to get animmigration bill through, and
you're always I mean you knowthis history like if you an
immigration bill that passes bya hair is a miracle, right,
(22:17):
you're not.
You're not going to get vetoproof majority.
So until the White Housesignals that they're interested
in some sort of grand compromiseon immigration, you're not
going anywhere.
Remember also that theRepublicans, I think as of this
morning, only have like a threeseat majority in the House.
So they're in the situationthey've been in for a while,
which is any particular factionof four can kill anything.
(22:37):
So it's not a circumstancethat's really set up to do
anything on immigration.
Border is different.
So can you make progress on theborder?
Yes, because you have supportfrom the White House, you have
plenty of air cover for that.
I think you can pass it on apure Republican vote.
People are less skittish abouta border bill than they are
(23:01):
about an immigration bill.
Ted Stank (23:02):
Okay, that's a great clarification.
Tom Goldsby (23:03):
Now, marianne, I know that you have been very
passionate about the need to acton immigration and you dragged
me to DC a few years ago.
I think you warned me before wegot there.
It's like just don't expectmuch response again from a
bilateral representation that wehad during our visit on matters
(23:27):
of immigration.
I mean, do you think thatthere's?
Maybe we can break through herea little bit Again how critical
it is to your 85% stat of amoment ago?
If we wanna have any growth,we're going to have to rely on
on, dare I say, legal andillegal immigration to support
our economy.
Marianne Wanamaker (23:48):
Well, you didn't bring me here to be a
political science commentator,so I'll try to stay limited in
my comments on this.
I'll just say, like you know,the big lobby for immigration
reform in Washington DC is theChamber of Commerce, and the
Chamber of Commerce isn't surewhat which is their party
anymore.
And so I think you know, if youlook like, think about the
appointment or the intendedappointment for Secretary of
(24:10):
Labor, which is a very pro-labor, pro-union Republican and if
you're the Chamber of Commerce,you're looking at that
appointment and thinking like,ok, wait a minute.
Right, this is not what Ithought I was getting out of
Republican administration.
So I just think that theclassical way that immigration
policy got developed and passedin Washington was big business
(24:35):
saying we have to have a smartimmigration policy to have
economic growth.
That's the conversation thatwe've been having for the last
eight years.
I've been having that with anybusiness leader who will listen
and they get that.
But they don't have a lever tomake it happen because they
don't control the immigrationpolicy of the Republican Party
anymore.
They probably do have influenceon some part of the Republican
(24:56):
Party and some part of theDemocratic Party, but again,
unless you have the White Housealigned.
You're not going to makeprogress like that.
Tom Goldsby (25:03):
Hey, marianne, thanks for that, and I think
we've touched on tariffs, we'vetouched on trade, we've touched
on immigration Something youmentioned earlier that didn't
really get a lot of play in therun up to the election national
debt.
And you rattled that offearlier as a critical issue.
Can you explain to us why youthink national debt I mean
(25:24):
Grover Norquist was nowherearound the dial, why you think
national debt I mean GroverNorquist was nowhere around the
dialogue?
You know just a blast from thepast, but you know, during the
previous Trump administration, Iknow that toward the end it was
COVID spending and all thatstimulus, but the debt did
balloon in the last Trumpadministration substantially.
And there's talk of, you know,big spending in areas like
defense, maybe less in socialspending, but where do you think
(25:47):
the national debt needs to fitinto our dialogue?
And maybe, why should supplychain managers be concerned
about it?
Marianne Wanamaker (25:53):
Well, this is the first time national debt
has appeared on my list ofimmediate concerns.
So people always ask me likewhen is the reckoning going to
come with the national debt?
I have no idea, but it's closerthan it was two years ago.
I can say that I think it'scloser than it was on November
4th.
To be honest with you Now,neither party has made any
(26:13):
attempt to pretend that they areinterested in controlling
government spending.
Really, neither party.
Here's what I think has changedin the minds of economists and
others who are watching thisissue.
I think we pretended for alittle while that you could
suspend economic reality, andwhat I think has happened is
that the Biden administrationsuffered the costs of inflation
(26:36):
in an electoral loss.
They made a decision rightafter he is elected in 2020,
promises in 2020 that he's goingto give families money in 2021.
He's going to give every family$2,500 or whatever it is.
At that point, the economydidn't need the juice.
He had promised he was going todo it and so he did it, and
(26:56):
they continued to fuel thespending in early 2021.
And it came back to bite themand they could never get
inflation back under control.
So if you're an economist andyou're watching that.
You're saying well, look atthat, right, actions do have
consequences.
We always said they did andthey weren't, it wasn't showing
up, but look there it is.
And then when he loses, whenhis party loses the election in
(27:18):
November, in some ways, it'skind of a full circle moment for
economists who are like, oh,actions have consequences and
those economic consequences haveelectoral consequences and this
is the way this thing issupposed to work.
And I think we are seeing thesame thing play out on the
national debt side Now.
Will those consequences appearin the Trump administration such
that they suffer the electoralcost of that?
(27:41):
I don't know that for sure, butI do think people are
recognizing that.
Ok, same same song, second verseRight.
When you overspend yourcapacity year after year after
year after year and you don'tsend clear signals that you're
serious about getting the thingunder control, investors lose
confidence in the ability of theAmerican bank to pay what it
(28:02):
owes, and that will haveconsequences.
And you cannot avoid thoseconsequences.
Right, you can't wish them away.
They won't disappear.
People's interest rates will goup overnight and you will be in
a debt crisis and you will haveto face it.
Does it happen in the next fouryears.
I don't know.
I think it really does in someways engender confidence in this
feedback system that now, whenyou do things that are
(28:23):
economically unsound, eventuallyyou have to pay the prices for
that this is fascinating to me,mary.
Tom Goldsby (28:30):
It really is so fascinating, so great.
I have an interesting wrinklefor you.
Ted Stank (28:34):
So it's 2024.
If I were to say to you in Idon't know 1974, 1984, that we
have some in the supply chainarea in particular, we have some
big labor issues that are goingto come up pretty quickly.
In fact, the East and GulfCoast port labor contract was
pushed off until after theelection.
(28:54):
In fact it's going to come up,I think, in mid-January for
expiration again unless they'reable to get something worked out
.
If I were to tell you in 1974that the GOP was going to be the
party that was going to bepro-union, it would be
interesting to see economists'reactions.
But in 2024, the speculation Iam hearing is that the Trump
(29:16):
administration is going to wantto get a quick win with a really
important constituency in thisnew GOP coalition and that is
big unions.
What's your take on that?
Marianne Wanamaker (29:26):
I mean, what a way to shore up your newfound
friends.
So I have a 16 year olddaughter who's in a US history
class in high school and I'vebeen studying with her this week
for an exam and they've beenworking on the 1850s and the
great realignment of parties inthe 1850s and just how fickle
people can be Right.
And so Stephen Douglas says onething in one debate and it just
(29:47):
it realigns an entire party andthrows an entire election and
sends the country into civil war.
Right.
Ted Stank (29:52):
Yeah.
Marianne Wanamaker (29:53):
So electorates can really be pretty
fickle.
Union voters have have shownthemselves to be somewhat fickle
, and I don't use that as anegative term, I just mean like
they're willing to move theirpower into a different party if
the circumstances suggest thatthey should.
And so you're kind of an oldschool Democrat, and I've heard
a couple of old school Democratsdo this on podcasts recently,
(30:15):
like they're furious about this,right, I cannot believe that
these voters abandoned thisafter all of the years of work
that we did for them.
Yeah, but voters are forwardlooking, not backward looking,
right, and so they saw somebodywho made some promises they
liked and then jumped on boardwith that.
So if you're the Trumpadministration and you can throw
(30:36):
some wins and victories theirway in the short run to thank
them for doing that, I think youdo that.
Tom Goldsby (30:41):
So a clear distinction between union
leadership and union membership.
Right, and that's where we sawthe endorsements that perhaps
you would think would have comearound for Biden.
That didn't, because themembership wasn't rallying right
the blue car workforce.
So yeah, that's kind of wherewe are and it'll be interesting.
(31:01):
I did also want to get yourreaction to something to kind of
look at geopolitics again in adifferent light.
The South Korean presidenttoday, who issued martial law,
only to walk it back when therewas immediate reaction to that.
But here we have one of ourstrongest allies in the region,
(31:23):
someone that we are quitedependent upon and, in turn, is
quite dependent upon us fordefense and other purposes.
But how do you think the worldought to be reacting to some
suggestion of martial law from atried and true ally?
Marianne Wanamaker (31:37):
Yeah, I didn't get a chance to check and
see what happened to interestrates in South Korea in the
middle of the day, but you know,my takeaway from all of that
was yay for democracy, right.
Yay for 190 people, I think, intheir legislature, saying like
absolutely not, we're not doingthat right.
And I haven't read enough toknow whether that take is
correct or not correct.
But I immediately thought okay,if the Trump administration
(32:01):
tried to do the same thing, whatwould happen in our houses of
Congress?
Would we get the 435 to nothingvote in the House?
I don't know, but I hope thatthe answer to that question is
yes.
Ted Stank (32:11):
Plus tens of thousands in the streets.
Marianne Wanamaker (32:13):
Yeah.
So in a world where people areso cynical about democracy, the
kind of democracy that Americansenjoy and that we try to spread
around the world, I thought itwas kind of a nice little
lightning moment.
Ted Stank (32:25):
Well, hey, marianne, our producers are starting to
give us the hook sign here.
We could go on with thisforever, like things.
I haven't asked you yet that Iwould love to get your take on.
What about a couple ofbillionaires managing something
called the Department ofGovernment Efficiency?
Okay, can we talk?
Marianne Wanamaker (32:40):
about that for 30 seconds though.
So there's no government ruleabout how short this podcast has
to be.
Here's what I think about that.
Okay, the folks who are incharge of that operation are
dreamers.
They are innovators, they arechange makers, they are
extraordinary minds.
Cutting costs from governmentis an entirely different skill
(33:02):
set, so what I hope they realizeis that they are the messengers
and the voices, and maybe eventhe strategists.
But I hope they pull somepeople onto their team really
really fast who understand howgovernment works and can get in
there and do the hard operationskind of stuff.
(33:22):
That cost cutting actually isRight.
It's not fun, it's notglamorous, it's not dreamy, it's
not any of those things.
So I just see a misalignmentbetween skill sets and what
needs to happen, and I'm hopingthey can fill that gap really
quickly.
Tom Goldsby (33:36):
Well, they're looking for volunteers, I
believe so, marianne, even ifyou want to volunteer some time
over this holiday break, I'msure they'd be quite receptive
to that.
Marianne Wanamaker (33:46):
My husband will tell them I am not much of
a cost cutter myself, so I thinkI'm not their candidate.
Tom Goldsby (33:58):
Fair enough.
Well, Marianne, thank you somuch.
Always a joy and always so darneducational.
I learn so much when you're onthe show and we get such a
reaction as well when you are onthe Tennessee on Supply Chain
Management podcast.
So thank you so much.
Ted Stank (34:07):
I'll tell you, the thing that I have enjoyed the
most since Tom and I startedthis podcast was the
intersection between economicsand economic policy and supply
chain strategies and operations.
Tom and I have had to kind ofbecome bootstrap supply chain
economists if we could coin thatterm and to have a real pro
(34:29):
like you on to talk about theseissues and really understand how
decisions made economically notonly in Washington but around
the globe impact supply chaindecisions has been really
fascinating to me.
So thank you for always beingwilling to come back and talk to
us and talk to our advisoryboard and really to share your
thoughts.
It's great.
Marianne Wanamaker (34:48):
Anytime Go Vols, go Vols.
Tom Goldsby (34:51):
Well, with that, why don't we close out?
And again, listeners, pleasesend your questions and comments
to gsci at utkedu and we'll seeyou down the road.
Have a wonderful holiday seasonand we look forward to bringing
out another podcast early in2025.
Be well.
Introduction & Outro (35:11):
Thanks for tuning in to Tennessee on
Supply Chain Management.
If you enjoyed the episode,subscribe today on your favorite
listening platform to get allof our episodes as soon as they
drop, and don't forget to take amoment to leave us a rating.
Have any questions, thoughts orfeedback?
We'd love to hear from ourlisteners.
Email us at gsci at utkedu.
Join us next time as wecontinue pulling back the
(35:33):
curtain on the world of supplychain, educating and
entertaining you along the way.
Until then, listeners.
Welcome to the Tennessee on Supply Chain
Management podcast.
Listen in as co-hosts Ted Stankand Tom Goldsby set sail into
the world of end-to-end supplychain management, diving deep
into today's most relevantbusiness topics.
They'll share insights inpressing industry issues and
tackle the challenges keepingsupply chain professionals up at
night.
If you're enjoying the ride,download and subscribe to
(00:22):
Tennessee on Supply ChainManagement on your favorite
podcast platform now.
Tom Goldsby (00:27):
Hello and welcome to the Tennessee on Supply Chain
Management podcast.
I'm your co-host, Tom Goldsby,coming to you from Rocky Top,
Knoxville, Tennessee, anddelighted to be joined by my
good friend and colleague, DrTed Stank.
Hey, Ted, how you doing.
Ted Stank (00:43):
Tom, how you doing.
I'm joining you from oursatellite campus in Beaufort,
North Carolina.
I'll be back with you laterthis week to get all of our
executive graduate programsgraduated and out of here by
December 13th.
Tom Goldsby (00:57):
Wow, exciting times .
You know all this hecticactivity.
I know we're wrapping upbusiness for the semester.
Right about now, in fact, I hadmy last live class session of
the semester.
I wouldn't say that all 768students showed up to their
intro to supply chain managementclass, but it was a good share
of them and they were allwanting to know what's going to
(01:18):
be on next week's exam and Ihave to say I dropped a few
hints, but not full disclosureby any means.
Ted Stank (01:28):
I thought you were going to say that of your live
class.
Tom Goldsby (01:29):
Not all of them were actually alive.
Well, that's another story.
In fact, I did throw a questionout to them about a month ago.
You know, we're kind of in thedoldrums of early November.
We're running on fumes at thispoint and I did actually say,
hey, would you do me a favor,put a couple of fingers up to
your throat and just tell me ifyou feel anything?
And I don't know, I think thatgot it, made him a little angry,
(01:52):
which was part of my point,sparked a little energy in them.
But anyway, we're kind of inthose, those final hours of the
semester.
We're putting the wraps onleadership academies, right, ted
, and a lot of activity going onhere on campus.
Absolutely, these are a hecticcouple of weeks and we're just
waiting to see who we're goingto play in our first ever
(02:13):
playoff football game too.
So that should be announcedlater today.
I think that we need toprobably have a little
conversation, but I just don'tthink we should keep our guests
on the sidelines for very long.
What do you think?
Ted Stank (02:26):
Yeah, the guest that we have today is not a sidelines
player.
She is absolutely a starterthat needs to get as much
playing time as possible.
Tom Goldsby (02:34):
Certainly Well, marianne Wanamaker is the Dean
of the Baker School of PublicPolicy, a professor of economics
in the Haslam College ofBusiness and a frequent flyer
when it comes to the Tennesseeon Supply Chain Management
podcast Back by Popular Demand.
It's been a while, marianne,since you've been with us.
Welcome yeah.
Marianne Wanamaker (02:52):
I don't know what y'all have been doing over
here without me.
Tom Goldsby (02:55):
Well, our ratings have plummeted, so we realized
we needed to bring you back inthe mix and we'll see if you are
the catalyst that we think youare.
But welcome to the show.
And of course, you know we'reon the far side of an election,
a big, big election, and I thinkthat's going to be a primary
topic of conversation.
Everyone's speculating on whatthe new administration the new
(03:16):
old administration, if we'regoing to call them that will
have in store for us.
A lot of talk of tariffs andimmigration policies and all
that stuff, and we willcertainly get to it.
But, Ted, I want to throw yousomething first.
Within the logistics and supplychain space, we always keep a
close eye on the LogisticsManager Index and I think you
caught a glimpse of that thismorning and I'll have to admit I
(03:37):
missed it.
My apologies to the Rogersbrothers who put that out Dale
and Zach Rogers, father-son duo,actually.
But, Ted, what's the read fromDale and Zach on the LMI?
Ted Stank (03:47):
Yeah, the November index just came out and for
those of you who don't know andwe had Dale and Zach on a few
months ago the LogisticsManagers Index is an assessment
of logistics managers to get asense from them on what's going
on in transportation,warehousing, inventory et cetera
, whether things are inexpansion mode or shrinking.
It's kind of perceived to be alead indicator of economic
(04:10):
activity because if we don'thave inventory then that's the
expectation that sales are goingto be low and things like that.
The index for November wasstill pretty hot.
It was 58.4, anything abovea 50is in expansion territory, a
little bit cooler than October.
But October frankly, was thehottest since September of 22
when we were kind of coming outof the COVID doldrums.
(04:32):
Some really interesting readings.
Inventory was down a bit andthey're tracking that as all the
stocking up that we did duringthe summer as an early holiday
stock up period because of fearsof port strikes and tariffs and
excess costs in maritimeshipping.
So inventory is coming down alittle bit.
We can talk more later aboutwhat the retail holiday was like
(04:54):
over the last several days butin general things are looking
pretty hot from logisticsmanagers, which means
warehousing prices are up,capacity is down, transportation
, pricing up, all those kinds ofthings.
Tom Goldsby (05:06):
Well, cyber Monday, just to put a little timestamp
on where we are actually, it'sGiving Tuesday today, I believe
December 3.
And yesterday was Cyber Mondayand I think they were expecting
big things.
From first reads, it soundslike Friday was a really big
Black Friday and things aregoing pretty robustly in retail.
So we need our supply chains tobe performing at a high level.
(05:29):
Make sure those shelves arestocked and those fulfillment
centers are ready to ship.
Ted Stank (05:35):
Yeah, latest I saw was that the retail holiday was
about a 5% increase over lastyear, which is a good sign.
A lot of interesting thingsunderneath that number, like who
were the winners and losers,and, from what I've been hearing
, it's mainly discounters thathave really won, that consumers
were being very price sensitiveabout where they went to shop.
That being said, we spent 5%more than we spent last year.
(05:57):
So in an environment whereconsumer confidence is always a
little bit iffy, consumers arestill spending.
Tom Goldsby (06:03):
Well for sure, and this is such a terrible label to
put on anyone or anything.
But speaking of losers, PatGelsinger is out at Intel Don't
know if you saw that, but in thelast few days, forced out by
the board and I guess hisrecovery administration kind of
heading out the doors throwingmoney out.
I think TSMC got $6.6 billionabout 10 days ago and then more
(06:24):
money's heading to Ukraine, Ithink $700 million just
announced, and so a lot ofspending going on to try to keep
those initiatives, I guess,moving in the direction of that
(06:44):
administration.
Ted Stank (06:45):
But hey, Tom, we're playing defense here a little
bit.
We just said that we were goingto get the offense on.
Tom Goldsby (06:50):
Let's go.
Ted Stank (06:51):
Let's get Marianne Wanamaker to join us.
Marianne, a lot of what hashappened over the last couple of
months was speculation aboutwhat was going to happen with
our big national elections onNovember 5th.
There was so much uncertainty.
I haven't read a lot of thekind of after action reports
about why the polls were not asaccurate as they could have been
(07:12):
.
I know a lot of people saidthat it was kind of a toss up
election and when we all woke upon the 6th it didn't seem to be
much of a toss up at all, withDonald Trump seizing his second
presidency as well asrecapturing Senate with a GOP
majority.
So I'd love to get your take onsome of the prospective policy
(07:33):
issues that this newadministration is going to put
into place that will impact usin supply chain management.
Marianne Wanamaker (07:39):
Well, again, thanks for having me.
It's fun to be here again, andsomeone described it to me the
day after the election as anarrow blowout that stuck with
me.
I think that's a reallyaccurate way of thinking about
that election, like, yes, we allwoke up the next day and it was
clear.
I was up at 430 in the morningto do local TV and on my way to
the local station that calledthe whole thing.
So I wasn't expecting that.
(08:00):
I think it was surprising to us, but it still was not.
The swing states were stillswing states and those margins
were still relatively narrow,and so there still appears to be
a large section of Americanswho are persuadable to either
side, republican or Democrat andthat's the way it's supposed to
work.
So you know, from myperspective, I think it's just a
really healthy outcome.
So I mean, I'm not going totell you anything you don't know
(08:23):
.
The big issues facing the Trumpadministration are taxes,
tariffs, the national debt,inflation.
I mean, it's pretty standardset and in many ways, I will say
that it feels a lot like 2016.
Coming in in 2016, the Trumpadministration was really
focused on tax reform.
The tick-to-toe stuff thathappened in the fall of 2017 was
(08:46):
teed up in the election, andthen there was, of course, a ton
of work on trade, to someextent, immigration although I
would call what happened in the2016 election to be more about
the border than immigration.
We can talk about thedifference in those two things,
and so those are the same issuesthis administration is facing.
I mean, they've got all thesenational security, foreign
(09:06):
affairs issues as well, but theimmediate issues that that White
House will have to face arearound number one tax reform.
A bunch of stuff is sunsetting.
They've got to decide reallyquickly what they want to do
about it.
And then they've got.
They've promised the Americanpeople they're going to do
something about tariffs, andthey promised they're going to
do something about the borderand immigration.
This time, you know, a littlebit of a rerun.
(09:29):
I've seen this show before.
Ted Stank (09:30):
In some ways, so let's kind of start peeling the
onion here a little bit andreally talking about a few of
those issues that you touched onthat have major implications
for supply chain managers, thefirst one being tariffs and
trade.
Obviously, there's been a lotof headlines in the last week
about a 25% tariff on Mexico andCanada unless they can make
(09:52):
some progress on immigration.
An additional 10% on Chineseimports.
A lot of uncertainty aboutwhat's going to happen with
European and our partners in theEU.
So let's talk tariffs and tradefor a little bit.
First and again, we're in adifferent place from 2016 in
that China is not our number onetrade partner right now.
There has been movement awayfrom China significantly,
(10:15):
although China is still massive.
Marianne Wanamaker (10:18):
Yeah, and most of those places move their
stuff to Mexico, right.
So I actually think in theelection itself, in the campaign
, in the conversation abouttariffs, as people were trying
to critique the strategy, thetool they were using was largely
about inflation, right, like,okay, if you add all these
tariffs, you're going to raiseinflation and that seems
(10:38):
counterproductive and I thinkthat missed the mark then and it
really misses the mark now.
The thing that the tariffs donow, or the threat of tariffs do
now, is just generatesuncertainty.
Uncertainty is a killer forcapital investment now, both
domestically and abroad.
So I don't think that theintroduction of special tariffs
(11:01):
on Mexico and Canada has madeany company more likely to cite
something in the United Statesthan they were on November 5th,
because what it has revealed isa little bit of erraticism that
makes people really nervousabout citing things anywhere
domestically, abroad, becauseyou don't know to your point
this is your territory.
You don't know where the supplychain is for the thing you're
(11:21):
thinking about establishing inthe US.
So you don't want to establishit when you don't know what the
status of Mexico is, Right.
So I just think the whole thingto me right now that is a
conversation about uncertaintymore than it is about prices for
Americans.
Ted Stank (11:34):
OK, interesting, because I've always heard that
counter argument about well, ifwe raise tariffs, then companies
are just naturally going toraise their prices to cover
those tariffs.
Marianne Wanamaker (11:43):
So I don't think that's.
The primary impact for theAmerican economy is all the
stuff that's tied down,certainly.
Ted Stank (11:49):
So, Marianne, you had an insider's view during the
last Trump administration bybeing part of the President's
Economic Council, for was it twoyears that you were on the
council?
One year 364 days for taxpurposes.
Okay, you know President Trumpis renowned for being a master
negotiator.
In fact, he wrote a book on itcalled the Art of the Deal.
Right, how much of this do youthink is posturing on his part,
(12:12):
particularly with Canada andMexico, to get down and sit down
at the table and work onanother part of the onion,
immigration?
Marianne Wanamaker (12:19):
Yeah, I do think that it's become clear
what that strategy is and whatit looks like.
I think the fact that you sawthe Canadian Prime Minister fly
to Mar-a-Lago this weekend ispretty good evidence that that
is what the tool is for.
And yet if you talk to businessowners, they don't think that
enough to have confidence aboutwhat the supply chain from
Mexico might look like in sixmonths.
(12:41):
So, yes, it's probably anegotiating tactic, but it's not
so much of a negotiating tacticthat people don't think there
might be some real implicationsand need to plan for that.
And you know, I do think wetalked about this in our
pre-show discussion.
Like, I do think that theeconomic team that this
administration has assembledthus far and named thus far very
(13:02):
classical team with classicalinstincts and tendencies, the
kind of true believers ontariffs and tariff policy
haven't been named to anyofficial position.
That doesn't mean they don'thave influence.
It doesn't mean they're notwhispering in the president's
ear, but they're not heading NEC, they're not at Treasury,
(13:23):
they're not at Commerce, so youdo have a more traditional group
in place.
So if you're a traditionaliston economic policy, that's good
news for you.
Ted Stank (13:32):
Can you explain that to us truckers?
Does that mean a differentperspective on monetary policy?
Marianne Wanamaker (13:38):
Well, I think it means a more
traditional Republican view onfree markets.
Free markets win the day.
Ted Stank (13:44):
Okay.
Marianne Wanamaker (13:44):
And so all else equal lower government
taxes, more trade.
That immigration although it isnot currently functioning very
well, that immigration iscritical to our success.
Those voices are going to be inthe room, and that's my
takeaway from the appointmentsthat have been made so far, or
the intended appointments thathave been made so far.
Ted Stank (14:06):
That's very interesting yeah.
Tom Goldsby (14:07):
Thanks for that inside track and I guess we're
at about T minus 50 days beforeinauguration day.
And, ted, would you agree thatit seems like businesses with
which we engage they're justtrying to make sense and
speculate and enter into thescenario planning a bit?
Again to your question earlieris it posturing, as you pointed,
(14:28):
or is there going to be somereal substance?
And I think that's kind ofwhere we are.
I remember doing surveys backin 2018, 2019, about how
companies were dealing with thetariffs that were implemented in
the first Trump administration,and the most common response
was wait it out, and the premisewas we're not going to do
anything.
We might have a China plus oneif we can go to Vietnam or
(14:51):
Cambodia or what have you, justto kind of diversify the
portfolio a little bit.
But they still kept a prettyfirm footing in China.
They just diversified a littlebit and then, lo and behold, the
Biden administration comes inand they maintain the tariffs
and so it seems like the waitedout they're still waiting it out
from 2018.
Marianne Wanamaker (15:10):
So now I'm going to ask you a question.
So what had more of an impacton people's decision making?
Was it the trade policy of theBiden administration and the
Trump administration, so thetariff policy, or was it the
COVID impacts in specificcountries, like which of those
has been bigger in people'sdecision-making frames?
Ted Stank (15:28):
I think they were complementary, and we've been
talking supply chain managershave been talking for a long,
long time, at least since theearly 2010s about whether it was
sound strategy to have most ofyour eggs in the basket of one
country that, arguably, is thebiggest competitor of the first
half of the 21st centuryeconomically of ours.
(15:50):
And I think that thinking wasaccelerated by the first Trump
administration's tariff policies, and I think a lot of companies
were already thinking thenabout, hey, we need to start
finding alternative places, theChina plus kind of mentality
that Tom mentioned.
And then COVID came along andreally kicked that trend in the
butt.
I think people really realizedand CFOs realized we needed to
(16:14):
find other alternative sourcesto China, because if that spigot
got shut off whether it's forgeopolitical purposes, policy
purposes or global pandemicpurposes we couldn't have all
our eggs in that China basket.
Tom Goldsby (16:28):
Yeah, I would double down on that.
It was lead time and, worse,lead time variation.
Right, as I tell my students,the mean is mean but the
variation is meaner.
And you know, when you couldbank on four weeks transit time
Shanghai to Knoxville, that'sfine, We'll plan on that.
But when it's four weeks plusthree, four, eight weeks, what
(16:49):
have you?
That was the real killer.
Right, and 10,000 mile longsupply chains, I think.
And hence JIT got thrown over,you know, raked over the coals
and I think, more than anything,we largely absorb the tariffs
without any real.
I mean we weren't talking aboutinflation in 2018, 2019, 2020.
I mean, we weren't talkingabout inflation in 2018, 2019,
(17:10):
2020.
It was when we had the supplychain surge in demand, with
handicapped supply chains, wheninflation soared on us.
And you know I'm an econundergrad, so now it's time to
be set straight by the econ PhD.
Marianne Wanamaker (17:21):
What do you think, marianne?
Well, you know it's funny youmentioned inflation because,
like, if you read some of thiscriticism of the Trump
administration's tariff policies, what people will say is, like,
oh my gosh, this is going tofuel inflation.
We might get another percentagepoint on inflation.
Well, true, okay, but thinkabout what inflation is.
It's an ongoing rate of change.
So if the Trump administrationadds tariffs to everything
(17:43):
coming in from China, what was$100 is now $125.
That's a one-time increase inthe price, but it doesn't come
back next year, right?
So, like, it fuels inflationone time.
So can this country survive anincrease in inflation for one
year from what would have been2.3 percent to 3.3 percent and
(18:03):
then the year after that it goesback to 2.3 percent?
Absolutely.
So there's just to me thatincriminating evidence on this
is not great.
Policy isn't about inflation,it's just not that big of a deal
.
But it is about people'sinvestments and the way they
behave and the rearranging ofall the stuff y'all deal with.
And when people think, oh, I'mgoing to move it out of China
(18:25):
and one place, I might move itin Mexico, and then Mexico all
of a sudden is on the bad list,it makes it very hard to plan.
I was telling somebody theother day, like we just need a
country that's close to us,where no one would ever, ever,
ever want to leave that countryand come here, where we can site
some production facilities.
Where could that be?
(18:45):
It's not Canada, apparently.
Right, we need a country likethat, that is no immigration
threat and we're super close tous and we know exactly how long
it's going to take to get theship from there to here.
Ted Stank (18:56):
And you know the trend if you follow far direct
investment trends.
Over the last six, seven, eightyears it's so much of it has
gone to Mexico.
Mexico has seen a hundredspercentage increase in foreign
direct investment, much of itfrom Chinese companies, by the
way.
But I mean, I got to believethat Mexico is still going to be
the big winner of a China pluspolicy, at least for access to
(19:18):
the US Canadian markets.
Tom Goldsby (19:21):
Well, to that point earlier, right, I mean, if
10,000 miles is too far, howabout 100?
What about a thousand?
Right, right?
Ted Stank (19:28):
And not having to cross an ocean and go through
port and put it on rail.
And I do think it isintricately tied to immigration
policy.
Marianne Wanamaker (19:36):
It is.
The other thing I wanted topoint out is the fact that the
Biden administration didn'tchange the tariffs on China.
I think one way to read that isthat China is a country over
which we have very little power,right, I mean put it in the
category of Russia.
You can say whatever you wantin Washington, you can do
whatever you want.
Your ability to affect a changein behavior and the leadership
(19:58):
of that country is basicallyzero.
So you put the tariff on, youask for some change in behavior.
You're not going to get it, soyou can't take it off.
Mexico and Canada are not inthat category.
Those are countries where wehave a lot of potential to
change behavior.
The same is true for anycountry who we count on to be an
(20:19):
ally In Europe.
That's true.
So it's a different game, Ithink, when you're playing it
with an ally and a friend thanif you're playing it with an
adversary, and we need to kindof keep that in mind.
Ted Stank (20:28):
Yeah, marianne, can we pivot a little bit to this
immigration issue?
You know there was a lot ofconversation about a pretty
sound what most experts that Iknow and I'm no expert on it,
but most experts that I knowthought was a pretty sound
immigration bill coming throughCongress a year or two ago that
got voted down in the House.
Now that the GOP controls bothchambers of Congress, do you see
(20:54):
a similar immigration billcoming through that looks like
that one that actually getspassed this time?
Because another major thingabout policy for supply chain
managers is labor and theavailability of labor, and
particularly in warehouses andin some light manufacturing, et
cetera, immigration is reallyimportant to the availability of
labor and particularly inwarehouses and in some light
manufacturing, et cetera,immigration is really important
to the availability of labor.
In fact, I heard a statistic atour supply chain forum a couple
(21:17):
of weeks ago that today youcould probably correct us on
this, but today for every fivejobs there's four employees
available for that job.
That if we have massdeportation, that may be three
employees for every job.
What's your take on all that?
Marianne Wanamaker (21:32):
Yeah, well, here's another statistic for you
85% of the workforce growth inthe United States last year came
from immigrants 85%.
We are close to 100% dependenton immigration to drive growth
in workforce.
When we try to pretend thatthat's not true, we do ourself a
disservice.
I don't think any immigrationbill is moving anywhere in
(21:52):
Washington DC withoutpresidential support.
No matter who's in the office.
If you don't have the presidentbehind your immigration bill,
you are not going to go out on alimb for it, because that means
you got to have veto-proofmaturities in the.
House and the Senate to get animmigration bill through, and
you're always I mean you knowthis history like if you an
immigration bill that passes bya hair is a miracle, right,
(22:17):
you're not.
You're not going to get vetoproof majority.
So until the White Housesignals that they're interested
in some sort of grand compromiseon immigration, you're not
going anywhere.
Remember also that theRepublicans, I think as of this
morning, only have like a threeseat majority in the House.
So they're in the situationthey've been in for a while,
which is any particular factionof four can kill anything.
(22:37):
So it's not a circumstancethat's really set up to do
anything on immigration.
Border is different.
So can you make progress on theborder?
Yes, because you have supportfrom the White House, you have
plenty of air cover for that.
I think you can pass it on apure Republican vote.
People are less skittish abouta border bill than they are
(23:01):
about an immigration bill.
Ted Stank (23:02):
Okay, that's a great clarification.
Tom Goldsby (23:03):
Now, marianne, I know that you have been very
passionate about the need to acton immigration and you dragged
me to DC a few years ago.
I think you warned me before wegot there.
It's like just don't expectmuch response again from a
bilateral representation that wehad during our visit on matters
(23:27):
of immigration.
I mean, do you think thatthere's?
Maybe we can break through herea little bit Again how critical
it is to your 85% stat of amoment ago?
If we wanna have any growth,we're going to have to rely on
on, dare I say, legal andillegal immigration to support
our economy.
Marianne Wanamaker (23:48):
Well, you didn't bring me here to be a
political science commentator,so I'll try to stay limited in
my comments on this.
I'll just say, like you know,the big lobby for immigration
reform in Washington DC is theChamber of Commerce, and the
Chamber of Commerce isn't surewhat which is their party
anymore.
And so I think you know, if youlook like, think about the
appointment or the intendedappointment for Secretary of
(24:10):
Labor, which is a very pro-labor, pro-union Republican and if
you're the Chamber of Commerce,you're looking at that
appointment and thinking like,ok, wait a minute.
Right, this is not what Ithought I was getting out of
Republican administration.
So I just think that theclassical way that immigration
policy got developed and passedin Washington was big business
(24:35):
saying we have to have a smartimmigration policy to have
economic growth.
That's the conversation thatwe've been having for the last
eight years.
I've been having that with anybusiness leader who will listen
and they get that.
But they don't have a lever tomake it happen because they
don't control the immigrationpolicy of the Republican Party
anymore.
They probably do have influenceon some part of the Republican
(24:56):
Party and some part of theDemocratic Party, but again,
unless you have the White Housealigned.
You're not going to makeprogress like that.
Tom Goldsby (25:03):
Hey, marianne, thanks for that, and I think
we've touched on tariffs, we'vetouched on trade, we've touched
on immigration Something youmentioned earlier that didn't
really get a lot of play in therun up to the election national
debt.
And you rattled that offearlier as a critical issue.
Can you explain to us why youthink national debt I mean
(25:24):
Grover Norquist was nowherearound the dial, why you think
national debt I mean GroverNorquist was nowhere around the
dialogue?
You know just a blast from thepast, but you know, during the
previous Trump administration, Iknow that toward the end it was
COVID spending and all thatstimulus, but the debt did
balloon in the last Trumpadministration substantially.
And there's talk of, you know,big spending in areas like
defense, maybe less in socialspending, but where do you think
(25:47):
the national debt needs to fitinto our dialogue?
And maybe, why should supplychain managers be concerned
about it?
Marianne Wanamaker (25:53):
Well, this is the first time national debt
has appeared on my list ofimmediate concerns.
So people always ask me likewhen is the reckoning going to
come with the national debt?
I have no idea, but it's closerthan it was two years ago.
I can say that I think it'scloser than it was on November
4th.
To be honest with you Now,neither party has made any
(26:13):
attempt to pretend that they areinterested in controlling
government spending.
Really, neither party.
Here's what I think has changedin the minds of economists and
others who are watching thisissue.
I think we pretended for alittle while that you could
suspend economic reality, andwhat I think has happened is
that the Biden administrationsuffered the costs of inflation
(26:36):
in an electoral loss.
They made a decision rightafter he is elected in 2020,
promises in 2020 that he's goingto give families money in 2021.
He's going to give every family$2,500 or whatever it is.
At that point, the economydidn't need the juice.
He had promised he was going todo it and so he did it, and
(26:56):
they continued to fuel thespending in early 2021.
And it came back to bite themand they could never get
inflation back under control.
So if you're an economist andyou're watching that.
You're saying well, look atthat, right, actions do have
consequences.
We always said they did andthey weren't, it wasn't showing
up, but look there it is.
And then when he loses, whenhis party loses the election in
(27:18):
November, in some ways, it'skind of a full circle moment for
economists who are like, oh,actions have consequences and
those economic consequences haveelectoral consequences and this
is the way this thing issupposed to work.
And I think we are seeing thesame thing play out on the
national debt side Now.
Will those consequences appearin the Trump administration such
that they suffer the electoralcost of that?
(27:41):
I don't know that for sure, butI do think people are
recognizing that.
Ok, same same song, second verseRight.
When you overspend yourcapacity year after year after
year after year and you don'tsend clear signals that you're
serious about getting the thingunder control, investors lose
confidence in the ability of theAmerican bank to pay what it
(28:02):
owes, and that will haveconsequences.
And you cannot avoid thoseconsequences.
Right, you can't wish them away.
They won't disappear.
People's interest rates will goup overnight and you will be in
a debt crisis and you will haveto face it.
Does it happen in the next fouryears.
I don't know.
I think it really does in someways engender confidence in this
feedback system that now, whenyou do things that are
(28:23):
economically unsound, eventuallyyou have to pay the prices for
that this is fascinating to me,mary.
Tom Goldsby (28:30):
It really is so fascinating, so great.
I have an interesting wrinklefor you.
Ted Stank (28:34):
So it's 2024.
If I were to say to you in Idon't know 1974, 1984, that we
have some in the supply chainarea in particular, we have some
big labor issues that are goingto come up pretty quickly.
In fact, the East and GulfCoast port labor contract was
pushed off until after theelection.
(28:54):
In fact it's going to come up,I think, in mid-January for
expiration again unless they'reable to get something worked out
.
If I were to tell you in 1974that the GOP was going to be the
party that was going to bepro-union, it would be
interesting to see economists'reactions.
But in 2024, the speculation Iam hearing is that the Trump
(29:16):
administration is going to wantto get a quick win with a really
important constituency in thisnew GOP coalition and that is
big unions.
What's your take on that?
Marianne Wanamaker (29:26):
I mean, what a way to shore up your newfound
friends.
So I have a 16 year olddaughter who's in a US history
class in high school and I'vebeen studying with her this week
for an exam and they've beenworking on the 1850s and the
great realignment of parties inthe 1850s and just how fickle
people can be Right.
And so Stephen Douglas says onething in one debate and it just
(29:47):
it realigns an entire party andthrows an entire election and
sends the country into civil war.
Right.
Ted Stank (29:52):
Yeah.
Marianne Wanamaker (29:53):
So electorates can really be pretty
fickle.
Union voters have have shownthemselves to be somewhat fickle
, and I don't use that as anegative term, I just mean like
they're willing to move theirpower into a different party if
the circumstances suggest thatthey should.
And so you're kind of an oldschool Democrat, and I've heard
a couple of old school Democratsdo this on podcasts recently,
(30:15):
like they're furious about this,right, I cannot believe that
these voters abandoned thisafter all of the years of work
that we did for them.
Yeah, but voters are forwardlooking, not backward looking,
right, and so they saw somebodywho made some promises they
liked and then jumped on boardwith that.
So if you're the Trumpadministration and you can throw
(30:36):
some wins and victories theirway in the short run to thank
them for doing that, I think youdo that.
Tom Goldsby (30:41):
So a clear distinction between union
leadership and union membership.
Right, and that's where we sawthe endorsements that perhaps
you would think would have comearound for Biden.
That didn't, because themembership wasn't rallying right
the blue car workforce.
So yeah, that's kind of wherewe are and it'll be interesting.
(31:01):
I did also want to get yourreaction to something to kind of
look at geopolitics again in adifferent light.
The South Korean presidenttoday, who issued martial law,
only to walk it back when therewas immediate reaction to that.
But here we have one of ourstrongest allies in the region,
(31:23):
someone that we are quitedependent upon and, in turn, is
quite dependent upon us fordefense and other purposes.
But how do you think the worldought to be reacting to some
suggestion of martial law from atried and true ally?
Marianne Wanamaker (31:37):
Yeah, I didn't get a chance to check and
see what happened to interestrates in South Korea in the
middle of the day, but you know,my takeaway from all of that
was yay for democracy, right.
Yay for 190 people, I think, intheir legislature, saying like
absolutely not, we're not doingthat right.
And I haven't read enough toknow whether that take is
correct or not correct.
But I immediately thought okay,if the Trump administration
(32:01):
tried to do the same thing, whatwould happen in our houses of
Congress?
Would we get the 435 to nothingvote in the House?
I don't know, but I hope thatthe answer to that question is
yes.
Ted Stank (32:11):
Plus tens of thousands in the streets.
Marianne Wanamaker (32:13):
Yeah.
So in a world where people areso cynical about democracy, the
kind of democracy that Americansenjoy and that we try to spread
around the world, I thought itwas kind of a nice little
lightning moment.
Ted Stank (32:25):
Well, hey, marianne, our producers are starting to
give us the hook sign here.
We could go on with thisforever, like things.
I haven't asked you yet that Iwould love to get your take on.
What about a couple ofbillionaires managing something
called the Department ofGovernment Efficiency?
Okay, can we talk?
Marianne Wanamaker (32:40):
about that for 30 seconds though.
So there's no government ruleabout how short this podcast has
to be.
Here's what I think about that.
Okay, the folks who are incharge of that operation are
dreamers.
They are innovators, they arechange makers, they are
extraordinary minds.
Cutting costs from governmentis an entirely different skill
(33:02):
set, so what I hope they realizeis that they are the messengers
and the voices, and maybe eventhe strategists.
But I hope they pull somepeople onto their team really
really fast who understand howgovernment works and can get in
there and do the hard operationskind of stuff.
(33:22):
That cost cutting actually isRight.
It's not fun, it's notglamorous, it's not dreamy, it's
not any of those things.
So I just see a misalignmentbetween skill sets and what
needs to happen, and I'm hopingthey can fill that gap really
quickly.
Tom Goldsby (33:36):
Well, they're looking for volunteers, I
believe so, marianne, even ifyou want to volunteer some time
over this holiday break, I'msure they'd be quite receptive
to that.
Marianne Wanamaker (33:46):
My husband will tell them I am not much of
a cost cutter myself, so I thinkI'm not their candidate.
Tom Goldsby (33:58):
Fair enough.
Well, Marianne, thank you somuch.
Always a joy and always so darneducational.
I learn so much when you're onthe show and we get such a
reaction as well when you are onthe Tennessee on Supply Chain
Management podcast.
So thank you so much.
Ted Stank (34:07):
I'll tell you, the thing that I have enjoyed the
most since Tom and I startedthis podcast was the
intersection between economicsand economic policy and supply
chain strategies and operations.
Tom and I have had to kind ofbecome bootstrap supply chain
economists if we could coin thatterm and to have a real pro
(34:29):
like you on to talk about theseissues and really understand how
decisions made economically notonly in Washington but around
the globe impact supply chaindecisions has been really
fascinating to me.
So thank you for always beingwilling to come back and talk to
us and talk to our advisoryboard and really to share your
thoughts.
It's great.
Marianne Wanamaker (34:48):
Anytime Go Vols, go Vols.
Tom Goldsby (34:51):
Well, with that, why don't we close out?
And again, listeners, pleasesend your questions and comments
to gsci at utkedu and we'll seeyou down the road.
Have a wonderful holiday seasonand we look forward to bringing
out another podcast early in2025.
Be well.
Introduction & Outro (35:11):
Thanks for tuning in to Tennessee on
Supply Chain Management.
If you enjoyed the episode,subscribe today on your favorite
listening platform to get allof our episodes as soon as they
drop, and don't forget to take amoment to leave us a rating.
Have any questions, thoughts orfeedback?
We'd love to hear from ourlisteners.
Email us at gsci at utkedu.
Join us next time as wecontinue pulling back the
(35:33):
curtain on the world of supplychain, educating and
entertaining you along the way.
Until then, listeners.
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