For many rich economies the pandemic has provided a crash course in an unfamiliar experience: shortages of basic goods. Globalisation has made rich-country consumers used to cheap and abundant goods often produced by those in poorer countries. The coronavirus led to sudden changes in consumption patterns and stopped goods from flowing so easily around the world. Scarcity was the result.
Initially, governments rushed to secure personal protective equipment and retool manufacturers to produce ventilators. Many consumer essentials, and supermarket delivery slots, quickly disappeared as consumers switched from restaurants to home cooking. More recently the growth of online shopping has led to a UK cardboard shortage; prices for a tonne have increased tenfold.
Worldwide, the disruption led to clogged ports and delays in shipping after an initial decline in international trade was sharply reversed, partly thanks to demand for electronic distractions from all those bored in lockdowns. Containers, however, were marooned in the wrong part of the world and shipping costs rose.
Rising demand for electronics also contributed to a semiconductor shortage that, in turn, forced car factories to suspend production. Extreme cold in Texas exacerbated the problem in the US: the output of its oil refineries is used to make plastic components for carmakers, among others.
Scarcity can lead to behaviours that, with hindsight, we may recognise as irrational. At the start of lockdowns, toilet rolls and dried pasta flew off the shelves thanks to misplaced panic buying. More recently, initial optimism over the discovery of vaccines has turned to bitter disputes about who should get deliveries of these rare commodities. According to some behavioural economists, the experience of scarcity, whether of goods or time, can tax our minds and prevent us from making decisions that are in our long-term interests.
There is a difference, however, between bottlenecks and depletion. Most of the problems facing rich countries are temporary. Eventually, new drugs factories will come online and produce more vaccines; Texan refineries will reopen, easing the components shortage; and shipping containers will find their way back to the right ports. The problem is not how to produce enough per se, but producing enough to satisfy all demand right now.
A bigger concern is that the pandemic is a test run for how our societies will respond to a changing climate and a damaged environment. Depleting the world’s natural resources creates a scarcity that time will not alleviate: once a rainforest or endangered species is gone, it is gone for good.
This could include shortages of basic commodities we mostly never think about. The UN is warning that the world is running out of the sand that is vital for construction. Urbanisation in Africa and Asia is depleting the reserves in quarries, coastlines and riverbeds faster than they can be placed; abundant desert sand, eroded by the wind, is too small and round to use in construction.
Only water is used more in the global economy than sand. Here, too, shortages have already made themselves felt — from European trade interruptions caused by the low level of the Rhine in 2018 to this year’s drought in Taiwan, the country’s worst for decades, which forced its semiconductor factories to reduce consumption. Of all the lessons taught by the pandemic, perhaps the most important is how much we take for granted. There are plenty of other things we will miss if they disappear.
Source: Economy - ft.com
