Guns, Ships and Chips: On Economic Inflexibility
https://www.nytimes.com/2023/03/07/opinion/economy-ukraine-logistics.html
Paul Krugman notes:
The revelation that economies aren’t as flexible as we thought has many implications for policy. Supply-chain constraints weren’t the sole reason inflation took off in 2021, but they were clearly an important part of the story, with implications for future monetary policy. And in general, economic inflexibility suggests that we should be taking more precautions against the possibility of future disruptions, especially for strategic goods, but possibly more widely.
But all of that demands a much longer discussion. The main point for now is that it turns out that the Rolling Stones may have had it backward: Modern economies generally do a very good job of getting people what they want, but sometimes you just can’t get what you need.
https://www.nytimes.com/2023/03/07/opinion/economy-ukraine-logistics.html
Paul Krugman notes:
The revelation that economies aren’t as flexible as we thought has many implications for policy. Supply-chain constraints weren’t the sole reason inflation took off in 2021, but they were clearly an important part of the story, with implications for future monetary policy. And in general, economic inflexibility suggests that we should be taking more precautions against the possibility of future disruptions, especially for strategic goods, but possibly more widely.
But all of that demands a much longer discussion. The main point for now is that it turns out that the Rolling Stones may have had it backward: Modern economies generally do a very good job of getting people what they want, but sometimes you just can’t get what you need.