Hospital administrators resorted to just-in-time techniques to rein in costs.

By the early 1990s, the number of beds per 1,000 population had decreased by fifty percent. Hospitals began shedding beds, just as colleges began shedding tenure-track positions. They could no longer bill by the day, only by the case. Congress passed a bill that made Medicare payments far less able to cover a hospital stay. Like all other institutions relying on an ample tax base, hospitals ran into the consequences of Grover Norquist’s “starve the beast”. Yet it coped with the heightened demand, only needing to add a few extra beds. Like now, New York City was the hardest hit. But hospitals met society’s needs with few problems. For example, in the winter of 19, there was a flu epidemic-the worst outbreak since 1918. Even if they remained empty much of the time, they were crucial during periods of extreme demand. By the late 1950s, we had nine hospital beds for every 1,000 people. Like the university system, hospitals expanded in the mid-twentieth century when a reasonably progressive tax rate allowed them to add beds on a yearly basis. It turns out that they have followed in the path of Toyota and Wal-Mart. With patients now lying on gurneys in the hallway of hospitals everywhere, what happened to the “surge capacity”? Hospitals are expected to have a “surge capacity” in case of some calamity-either a pandemic like the current one or-god forbid-a nuclear war. It is not just masks that are in short supply it is also hospital beds. While Walmart was pivotal in development of supply chain management, there are few large companies that have not copied its practices via some form of cross-supply chain visibility and planning, extending the planning that happens within a firm very widely throughout the capitalist “marketplace.”Īs for just-in-time techniques accounting for the shortage of life-saving masks, Farhad Manjoo has only scratched the surface.

The same phenomenon occurs in retail as much as it does manufacturing (and manufacturing is merely another link within the retail supply chain anyway), with Toyota being one of the first firms to implement intra-and inter-firm information visibility through its Walmart-like “Kanban” system, although the origin of this strategy dates as far back as the 1940s. They even refer to how Toyota was a forerunner to Wal-Mart: In a book titled “The People’s Republic of Walmart: How the World’s Biggest Corporations are Laying the Foundation for Socialism,” Jacobin contributors Leigh Phillips and Michal Rozworski argued that if planning could work for a capitalist powerhouse, it could also work for state-owned enterprises. Some on the left were so impressed with Wal-Mart’s technological prowess that they saw it as proof that socialism could work.

Combined with a non-union workforce, it allowed Wal-Mart to become one of the great successes of the capitalist system. Using sophisticated computer systems, it can guarantee profitability on items that are characterized by low retail margins. Today, Wal-Mart is the marquee brand when it comes to just-in-time inventory. Ironically, this kind of advanced industrial engineering hearkens back to Frederick Taylor, who Lenin sought to emulate in the early years of the USSR. Toyota Corporation adopted it in the 1950’s and soon American auto-makers followed suit in the 1980’s. Just-in-time was also called “lean manufacturing” or “stockless production.” Management gurus saw it as a way to eliminate waste and continuously boost productivity. I remember first hearing about just-in-time inventory techniques in the 1990s in the aftermath of the collapse of the USSR. Hospitals began to run out of masks for the same reason that supermarkets ran out of toilet paper - because their “ just-in-time” supply chains, which call for holding as little inventory as possible to meet demand, are built to optimize efficiency, not resiliency. Like much else, mask manufacturing had migrated to China in the same way as all other textile industries had long ago. Alex Azar, the HHS Secretary had testified that there were only about 40 million masks in our domestic stockpiles, around 1 percent of what would be required. Manjoo identified just one of many failures of the Trump administration to be prepared for the epidemic. Times op-ed columnist Farhad Manjoo wrote about “How the World’s Richest Country Ran Out of a 75-Cent Face Mask.” The subtitle certainly went against the grain of what you’d read from a page dominated by Thomas Friedman: “A very American story about capitalism consuming our national preparedness and resiliency.”

Just in time inventory