Why Shortages Are Permanent: Global Supply Shortages Make Fantastic Financial Sense
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. Scarcities are their source of profits, and since it makes zero financial sense to spend a fortune building a plant to make solvents, lubricants, alloys, etc. in limited quantities in markets dominated by quasi-monopolies and cartels, shortages are a permanent feature of the 21st century global economy. The era of abundance was only a short-lived artifact of the initial boost phase of globalization and financialization; now that the consolidation is complete, shortages make fantastic financial sense. By all means thank Corporate America for squandering $11 trillion to further enrich the top 0.1% and insiders. Alas, there was no better use for all those trillions than further enriching the already-super-rich.