Wednesday, October 13, 2021
A pandemic-driven shortage of parts and labor has combined with a congested transport system to create an inflationary spike, with shipping rates doubling on some routes. Prices for everything from soybeans to natural gas have soared as supplies take longer to produce and arrive, and this high inflation is wiping out wage gains in the US, the UK, and Germany. The chaos on the ground may not disturb the lifestyles of the tech and financial elites, but it is hurting the middle and working classes, the groups most threatened by surging inflation.
The supply chain disaster has also revealed the existence of crippling economic dependence, particularly on China, in high-income countries. Today, whole industries in the West—from medical equipment to chip and car makers to food—rely on China for finished products and key components. When China cannot (or decides not to) supply these parts, whole industries suffer debilitating supply chain shortages. The notion of a rational, self-regulating market system is unraveling and may yet presage the demise of the prevailing neoliberal era.