We hear endlessly about the broken ‘supply chains’ that are causing product shortages and rising prices. Here is a pretty good overarching description of what exactly that means: the mix of radically changed consumer behaviors along with various knock-on effects from factory closures, retoolings and more that happened in the early months of the pandemic. I recommend it because it gives a good sense of just how intractable the issue is at least in the short term and how the different factors interact with each other.
What it makes me think of is something a little different: how little resilience has been built into the early 21st century global economic system. Some of this seems clearly to be the downside of the efficiencies created over several decades by what is sometimes called ‘just in time production’. The widget gets assembled with pieces that just arrived; it gets trucked to the port of entry on a truck that just finished its last haul; and it gets shipped on a container ship that just returned from its last voyage. No big inventories on balance sheets. Everything is there just and only when it’s needed.
This is a great system in a lot of ways. But it’s not a terribly resilient system when you have major external shocks.
Of course, there’s a different way of looking at this. We’ve been going through a historic global health crisis for going on two years and what we’re talking about is that you’re needing to wait several months for the exercise bike you bought for your apartment. Or you’re waiting for delivery of that car you wanted to buy and it’s more expensive than you’d expected. So in historical terms it’s certainly possible to see these as fairly mild aftershocks to a pretty massive global crisis, which is of course still on-going.
But we shouldn’t let ourselves or our global system off the hook quite so easily. We see the same dynamic at work as chronic severe weather puts increasing strain on regional electrical systems here in the US. We’re heading into a future with more turbulence not less and our systems – whether they be electrical grids or global shipping fleets – are highly reliant on things being very stable and predictable. That’s a challenge that won’t be solved even when these kinks from the pandemic get ironed out.
