Why Shortages Are Permanent: Global Supply Shortages Make Fantastic Financial Sense
October 6, 2021
The era of abundance was only a short-lived artifact of the initial boost phase of
globalization and financialization.
Global corporations didn't go to all the effort to establish quasi-monopolies and cartels
for our convenience--they did it to ensure reliably large profits from control and scarcity.
Not all scarcities are artificial, i.e. the result of cartels limiting supply to keep prices high;
many scarcities are real, and many of these scarcities can be traced back to the stripping out of
redundancy / multiple suppliers of industrial essentials to streamline efficiency and eliminate
competition.
Recall that competition and abundance are anathema to profits. Wide open competition
and structural abundance are the least conducive setting for generating reliably ample profits,
while quasi-monopolies and cartels that control scarce supplies are the ideal profit-generating
machines.
The incentives to expand the number of suppliers, i.e. increase competition, are effectively
zero. America's corporations spent $11 trillion buying back their own stocks over the past
decade; that's equal to the combined GDP of Japan, Germany and Italy. If adding new suppliers
to the global supply chain were profitable, some of that $11 trillion would have
exploited those vast profits.
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