Shortage, what is the shortage?The global market is delivering
If one word is used to summarize the main economic losses caused by the pandemic, it must be “shortage.” Starting in March 2020, our global economic system seems to have let us down time and time again: Firstly, it is unable to provide the required amount of personal protective equipment, and then the vaccine manufacturing inputs, vaccines themselves, commodities and raw materials, semiconductors, and hosts rely on them. Durable goods, and recent energy.
The economic consequences—inflation—come more violently and faster than most people expected, but not many observers and leaders consider the appropriate political conclusions to come violently and quickly: globalization and capitalism are not suitable for the purpose. Globalization, because it weakens the country’s control over the supply of important commodities. Capitalism, because private companies design their production for “just in time” rather than “just in case” considerations, prioritizing efficiency in normal times rather than flexibility in extraordinary times.
These judgments were touted in the early days of the pandemic and have inspired policy inspiration ever since. All major economic powers and many smaller economic powers have taken action to shift the globalized capitalist production model to a form that is easier for national authorities to grasp.
This policy shift may be reasonable, but the main factual premise of the new flexibility and autonomy doctrine is wrong. This pandemic tested the globalization of capitalism. There was a sudden and huge surge in demand, and it passed by in brilliant colors.
Take durable goods. The headlines about shortages are the only things that seem to be in sufficient supply. Everyone is delaying access to items such as cars, which were previously available for immediate satisfaction. But the actual supply of durable goods hit a record high.Since last summer, American consumers have been The number is much larger than the pre-pandemic trend. Many EU economies, including Germany, Italy, and the Netherlands, also Match or exceed Consumption level of durable goods in 2019.
What about semiconductors?in a Short paper A month ago, Daniel Rees and Phurichai Rungcharoenkitkul of the Bank for International Settlements reported that in 2020, Taiwan and South Korea’s semiconductor exports exceeded the record in 2019, and in 2021 it exceeded 2020. The current export volume seems to have increased by more than 30% two years ago. Hyun Song Shin of BIS added US semiconductor sales are much higher than in the years before the pandemic.
The same argument applies to the commodities most related to the pandemic itself. Recall that although the panic surrounding the supply of personal protective equipment was real, it dissipated within a month or so. Imports of test kits and protective clothing in the European Union increased by 20% and 40%, respectively.
There is a vaccine?There are a lot of criticisms Rich countries hoard Covid-19 vaccine When they are in short supply. But that was yesterday’s problem.Analyst estimate Vaccine manufacturers have produced more than 1 billion doses per month.
In short: shortage? What is the shortage? Of course, even these significant increases are not always sufficient to meet soaring demand. But the globalized capitalist production system did not disappoint us, but increased supply in record time to cope with one unexpected surge in demand.
Therefore, when we complain about shortages, we are actually complaining that growth is not faster and more stable. We don’t realize that it is natural for sudden, unpredictable demand to be met immediately without noticeable interruption. This shows that we have internalized the ability of the global market to do this. Capitalist globalization is suffering the reputational consequences of its own success.
Have obvious qualifications. Enough production for everyone to share does not ensure that everyone can share: fair distribution is not one of the powers of capitalism. The government helped coordinate production capacity, let alone pay for it-a well-regulated market works best. Undoubtedly, the role of policy is to ensure that even short-term interruptions, such as the supply of PPE in a pandemic, will not occur.
However, with these warnings in full consideration, some people think that there are other economic, production and social organizations that can respond to the three-quarters of the changing global demand patterns in the past year?
There is no reason to believe that a renationalized supply chain-preventing globalization-can expand production faster than our current system. Considering the failure of states to ensure adequate stocks “just in case” or equitable distribution of vaccines around the world, why should we expect a more state-led production system — rolling back capitalism — either more fair or more elasticity?
At best, we can hope to adjust global capitalism on the periphery to make it better. In any case, investing in inventory may require companies to diversify and explain to taxpayers the insurance reasons for increasing costs—but to minimize it by purchasing from the global market during the economic boom. Promote public and private investment, and consider repatriation where national security requires domestic control. But in general, the lesson of the pandemic for global supply chain policy is to leave it alone.