Lynne Sladky/AP Photo
The CMA CGM Argentina container ship arrives at PortMiami, April 6, 2021. A shipping container shortage during the pandemic has affected trade around the globe.
The talk of the economic world is about shortages. Specifically, about labor shortages, buttressed by a record high in job openings, at 8.1 million, in the most recent survey from the Bureau of Labor Statistics. Because any threat that the great reserve army of the unemployed might not come to the rescue of low-wage employers must be attacked, this has led to the demonization of “lucky duckie” unemployed workers getting a whole $300 boost in their weekly checks. Some red states have rolled back that federal unemployment boost, and made gig workers and freelancers who cannot find work ineligible for support. While the Biden administration has rejected the premise that high unemployment benefits are keeping workers off the job, it also joined the parade by reinstating requirements forcing anyone offered a job to either go back to work or lose their benefits.
In reality, there is no consensus on the reasons for the labor shortage. It could just as easily be driven by a lack of child care preventing parents from returning to work, fears of contracting the coronavirus in workplaces with lax safety protocols, and most of all, terrible pay and poor conditions making arduous low-wage work simply unattractive. If employers would just pay a living wage and not rob the dignity of their employees on a daily basis, that labor shortage would rapidly dissipate.
But there’s another set of shortages in the economy, which are less likely to go away quickly. They are actual reductions in the supply of goods and services, which has an impact on the labor market, but also on the psyche of the nation. Matt Stoller of the American Economic Liberties Project wrote over a year ago that the coronavirus would lead to an end of “affluence politics,” the idea that America is a nation of abundance where any desire is at our fingertips. Since the gas lines of the 1970s, we have lived without shortages, mostly blissfully unaware of changes in production, logistics, and the failures of the financial plumbers and bureaucrats that make the economy run. Now is a moment to confront the fact that we have a problem of inadequate production alongside unequal distribution, and figure out what to do about it.
Now is a moment to confront the fact that we have a problem of inadequate production alongside unequal distribution.
The supply shortage everyone is talking about involves semiconductors, the essential hardware in electronic devices as small as a cellphone and as big as an airplane, and everything in between. The lack of computer chips caused several factories to suspend production; the auto industry lost 27,000 jobs in April alone due to this shortage. Beyond autos, hardware companies like Apple, tractor suppliers like Caterpillar, and even a small company that manufactures electronic dog-washing booths have been affected. And these production snarls have downstream effects; rental car companies that cut their fleets in the pandemic have found it hard to replenish with more vehicles, and freight rail services don’t have cars to move around and are losing business.
It’s true, as Kevin Drum says, that this kind of scarcity was largely (though not entirely) due to stupidity among manufacturers, which reduced their orders for chips during COVID and then never ramped them back up until it was too late. But that in itself was indicative of a comforting fiction our economic overlords tell us about just-in-time production, the idea that we should remove all slack from the system of supply logistics and only bring raw materials to the production process, or goods to retail markets, at the very moment that they are needed. This invites catastrophe, of the kind we’re seeing now, as those same people realize to their horror that they can’t get everything just in time anymore.
Beyond that, consolidation in chip manufacturing has led the dominant producers to focus on the most lucrative types of chips, leaving lower-tech (and lower-profit) models short of supply. The Biden administration and bipartisan groups in Congress have expressed interest in increasing domestic supply, but realistically that will take years. And it’s just true that having a large portion of semiconductors made only in Taiwan builds fragility into an already fraught supply chain, whether because of the country’s relationship with China or just because of a natural disaster like an earthquake. We saw this early on in the pandemic, when lots of personal protective equipment and pharmaceutical supplies were made in parts of China that were on lockdown.
But shortages are not just limited to computer chips. There’s a chicken wing shortage, due to a cold snap in the Midwest and increased demand for an easy takeout item. There’s a ketchup shortage, because all this takeout with a couple of packets thrown in has increased the need for more. (Heinz says they’re working on it.) Global needs for oxygen have spiked due to treatment of COVID patients, leading to an oxygen shortage. One of the bigger problems in vaccine production is from the shortage of a specialized plastic bag, a consequence of a global monopoly in that product, which has created barriers for rivals to enter the market. The shipping container shortage, created through increased demand and a mismatch of shipping during the pandemic, has led to freight rate spikes and shortages of the component parts those containers are supposed to carry.
The illusion that we can outsource, concentrate, and grind down all our production and then immediately spin it back up has been shattered.
Some of these are just unfortunate side effects of changing pandemic lifestyles. But a ransomware attack on the largest U.S. fuel pipeline has created gasoline shortages throughout the Southeast, leading to panic buying. We shouldn’t expect multiple redundant oil pipelines supplying the same regions of the country, but if we are so reliant on concentrated infrastructure you would think we’d have a half-decent cybersecurity strategy to protect them. But corporations are inattentive to the possibility of hacking, and shortages result.
Elsewhere, the presence of so-called “power buyers” distorts markets and leads to shortages. Independent groceries cannot get supplied before Walmart and Amazon, leaving their shelves frequently bare a year-plus into the pandemic. This squeezes suppliers as well as the smaller grocery stores and the customers they serve; Walmart is fining suppliers who fail to get them goods on time. You see this replicated in the medical industry, as power buyers set prices and suppliers must consolidate and find cheap offshore labor to make production of most generic drugs profitable. The vulnerable supply chains that come out of that process lead to predictable results.
The decades-long illusion that we can outsource, concentrate, and grind down all our production and then immediately spin it back up at our own whim has been shattered. The lack of flexibility in supply means that extreme weather or just shifts in personal habits can leave us wanting. We haven’t paid attention to how the economy actually works, and we’re living with the uncertain and debilitating consequences. To paraphrase Stoller, being a wealthy society means being able to provide for the needs of our people. Theoretical wealth that cannot meet that challenge is useless paper.
Our real shortage is in imagination, in the ability to conjure up a society where everyone is cared for. That’s going to require some redundancy in our supply chains, yes, to protect against disaster. But more than that, it’s going to require a dismantling of the negligence with which elites have managed our economy.
