It’s a fundamental economic truth: Scarcity exists because resources are limited. It is a matter of unlimited wants versus limited resources.
United States residents are unique and pampered. In fact, the U.S. has been called the land of the plenty when compared to other countries and economic systems. Americans are accustomed to fully stocked automobile showrooms, grocery stores, lumber outlets, technology centers and other suppliers of goods.
Most people alive today have never experienced true shortages of basic supplies. There were shortages during World War II because resources were devoted to the war effort. There were shortages of gasoline in 1973 during the OPEC oil embargo and in 1979 with the Iranian revolution. Amid the COVID-19 pandemic in 2020, toilet paper and hand sanitizer were scarce, but those shortages were short-lived.
Something is different now. Have you noticed empty shelves in your favorite store? Have you placed an order only to discover the item was out of stock or backordered? Then months later the order remained unfilled? Have you been unable to repair your car because an essential part can’t be found? Is lumber unavailable or too expensive?
The pandemic has been blamed for the shortages and broken supply lines that deliver goods to market. The goal of shuttering the economy was to break the pandemic cycle. That might have been helpful, but not catastrophic to the economy. But the extended closures that followed in some states were indeed catastrophic. Is the pandemic to blame? Or is it the response to the pandemic?
A supply chain is defined as a system of activities, information, organization, people and resources supplying products and services to consumers. The supply chain everyone depends on was decades in the making.
Helen Raleigh, a senior contributor at The Federalist, wrote in a recent blog:
“The culprit of current supply chain disruptions is a persistent labor shortage caused by poor government policies.” She cited economist Richard M. Salsman from the American Institute for Economic Research, explaining the labor shortage has been both mandated by shutdowns of “nonessential” businesses and subsidized with extended unemployment benefits. That’s made it difficult for many businesses to attract and hire labor of sufficient affordability, quality, quantity and reliability.
Workers are needed to unload ships at port, drive trucks, man the rails, deliver goods and stock shelves. In the absence of these workers, consumers stare at empty shelves.
The unprecedented scarcity of goods Americans face now is different. The unintended consequences of government regulation have affected the economic principle of supply and demand.
In their book, “Common Sense Economics,” Joseph Calhoun, Tawni Ferrarini, James Gwartney, Dwight Lee and Richard Stroup define economics as the science of common sense. If that’s true, our scarcity today is a result of government bureaucrats who have no common sense.