by Mitch Kokai
Senior Political Analyst, John Locke Foundation
According to economists, we’re at the beginning of a “shortage economy” where shortages of goods like electronics and clothing will become commonplace.
Yes, the pandemic is partly to blame. Factories shut down and are just now revving up to full capacity. The “supply chain bottleneck” has become a fact of life. More than that, there’s almost $10 trillion worth of government stimulus in the West that’s burning holes in people’s pockets.
But there are several other factors affecting the supply of many goods.
“Yet the shortage economy is also the product of two deeper forces. First, decarbonisation. The switch from coal to renewable energy has left Europe, and especially Britain, vulnerable to a natural-gas supply panic that at one point this week had sent spot prices up by over 60%. A rising carbon price in the European Union’s emissions-trading scheme has made it hard to switch to other dirty forms of energy.” …
“The second force is protectionism. As our special report explains, trade policy is no longer written with economic efficiency in mind, but in the pursuit of an array of goals, from imposing labour and environmental standards abroad to punishing geopolitical opponents.”
Then there’s a problem with container ships. Right now, there are 76 container ships off the coast of Los Angeles desperate to dock and unload their cargo. There are similar problems on the East Coast as well.
The cost of shipping one container from southern China to the west coast of the U.S. is now $20,000. It used to be around $3,000. And even if you can get the ship unloaded, there’s a shortage of truck drivers to clear the docks and ports are running out of storage space to keep them. …
… The pandemic has had unforeseen effects on the economy that we’ll be feeling for years to come. One of those effects will be on the Christmas shopping season.