Don't take supply for granted

The recent kerkuffle around the US backing the suspension of Covid vaccine patents got me thinking about how we’ve become numb to supply woes.1 Capitalism has become so good at shipping goods worldwide that we cannot conceive a failure of supply, instead we come up with made up explanations that really aren’t true.

It is striking because I’m here to argue most apparent market failures are in fact due to supply problems. Some examples from recent news:

• The spansih Covid vaccine, delayed more than a year because the research team cannot procure lab animals to do the preliminary testing, nor can it find a company that would produce the vaccine at scale. A supply problem.

• The recent semiconductor shortage wreaking havoc in many industries from GPUs to cars, with some admittedly funny second-order effects. A supply problem.

• The housing crisis in densely populated urban areas. A supply problem2.

Don’t take supply for granted.

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1. Tabarrok has a bullish post explaining how patents aren’t the problem in the case of Covid vaccines, supply is.

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2. Also the reason why price controls won’t fix the problem.

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