We're here today for our periodic reminder that economies are complex systems that cannot be turned off and on on a moment's whim. If you artificially manipulate supply chains by forcing hundreds of millions of individuals around the world to stop going to work, there will be consequences. These consequences may not have been apparent at the time that the global economy was being locked down but it is becoming very apparent that the chickens are coming home to roost. We've touched on these supply chain issues in recent months. However, it seems like things are more pronounced in recent weeks.
A couple of examples from my own life are my father's inability to get cheap plastic cups for his coffee shop, my inability to buy a couch and have it delivered to my house in less than three months, and lead time on raw materials for our methane vacuums at Great American Mining. And as you can see from the tweets above, there are many other individuals who are unable to get a number of goods across different industries. Shipping delays, cancelled orders, and complete lack of accessibility.
Another important thing to note is highlighted by Lyle Pratt; at a time when there is more demand for goods you'd think it would signal to entrepreneurs and workers that there is an opportunity to make profits by being productive and closing the gap that currently exists between supply and demand, but this isn't the case. There is a labor market shortage that is preventing many companies from being able to even attempt to close that gap. Many who were forced out of the workforce when the lockdowns commenced are not willing to go back to work for one reason or another. I imagine a majority of the working class who hasn't gone back to work yet are remaining on the sidelines because they have been demoralized and/or increased unemployment benefits providing a lifestyle that is preferable to working a soulless job for a bit more cash.
The combination of disrupted factory lines, shipping containers anchored idle off the coasts of ports around the world, and an unwillingness from many to return to work is having a material effect on the price of goods and access to them. Hopefully this is just a blip and the flywheel of manufacturing and delivery can be started again, but what if it isn't? How bad has this massive market intervention thrown things off course? And if the answer is "really bad" how long does it take to stabilize things? How much collective productivity has been destroyed and what are the knock on effects from that? How much will the poor suffer?
With stock markets, real estate and bitcoin pumping there are a lot of well off individuals out there who are feeling really rich right about now. Understand that this could turn out to be only that, a feeling. You can have all the money in the world, but if stuff doesn't get produced you won't be able to buy anything with it. Actions have consequences and when man tries to play God, exhibiting immense amounts of hubris by thinking he can granularly control something born of nature, the free market, the consequences tend to be pretty negative.
Sleep regression is not fun.