When one studies a reported “scarcity,” one usually discovers that there are no deficiencies. This is expected in a free economy where there is no price control and no wide-ranging altruism. Disney mustard (“real mustard,” as I call my wife), requires a special kind of brown mustard seed. A French grower of mustard, Luke Vandermaisen, is quoted Financial times (“Great Disney Mustard Crisis in France,” July 12, 2022):
I never thought we would be so lacking.
Without this quote, Financial times Does not use the term “scarcity”. There really is no shortage. The price of special seeds has doubled and the price of mustard has increased by 10% or more but, at this price, a buyer can find as much as he wants to pay. Many other newspapers, less economically educated, fall into the trap of confusing deficits and high prices (again!) New York Times, USA Today, Etc. If they say “excess” to describe the price reduction!
Reminder: A deficit in the financial sense is a situation where something is unavailable at any price in the (legal) market.
While temporary local deficits (if we call them “deficits”) can occur, usually indicated by long delivery delays, the freedom of trade should quickly settle the imbalance. Looking at Amazon.fr (French Amazon) yesterday, I found that many brands don’t have stock, but some are available for delivery in about two weeks. At Amazon.com, from where anyone in the world can order if anyone pays transportation and possibly local tariffs, many brands of Disney mustard are now available, but the well-known French brand Maille is 25% more expensive than the two. A month and a half ago. (Note that “distrust” threats and official intimidation are often more intense in Europe, as a The Wall Street Journal Amazon’s article suggests this morning.)
Price adjustments, when they are not prohibited by the government (and perhaps sometimes by misguided altruism or commercial virtue-signals), so deficits do not occur. More generally, the so-called “supply chain” problems, the current buzzword, cannot be seriously analyzed without a factor on price.
In its summer issue RegulationMy article “Displaying Supply Chain Myths” reviews the problem with many current examples and a dive into basic microeconomic theory (complete with graphs).
Perhaps the most famous (real) deficit in recent history has affected cars for ordinary people in the Soviet Union (the Aparachis had special advantages). A peek at my article:
A frequently cited example concerns the former Soviet Union and its Eastern European satellites, where not enough cars were built to meet demand at state-determined prices. Like most products, the car shortage was local: it took about 10 years for an average citizen to get his ordered car, including a deposit that could reach 50%.
I notice that in the free market,
Supply chain problems are solved when consumers are willing to pay for their solutions. Otherwise, if consumers are reluctant, there is no supply chain problem.