The Supply-Chain Myth

Source: EconLog
by Pierre Lemieux

“When people don’t understand something, they often try to find a simple cause either hard and physical, or ethereal and spiritual. The ‘supply chain’ is a good example: it seems it is often viewed as a few big pipes that bring toys from China, semiconductors from Taiwan, automobiles from South Korea, and meat from the Midwest. When something hard hits and damages a pipe, the goods get stuck inside. Alternatively, when the government does not brandish its wand, the ethereal supply chain fails and stuff disappears. Despite two centuries and a half of economic analysis, supply-chain talk typically ignores the crucial role of prices on the open market.” (11/18/21)