In the midst of the chaos being caused by the Coronavirus (COVID-19), I think it is worth taking a step back to think about the role of markets and capitalism.
In particular, two key lessons from this are about shortages and the impact of markets. The shortages we face should make us thankful we are not in a communist or socialist society
The shortages seen on hand sanitizer, toilet paper, and cleaning products have been frustrating for many.
In the U.S., we are used to going to a store and assuming they will have what we need. For a few products, things are different right now.
But for much of the world now and throughout history, shortages are normal for far more than 3-4 products.
In the former Soviet Union, shortages were an everyday occurrence. The shortages were so bad that people would be forced to wait in line when certain products became available, and waiting in lines was considered a standard part of life for most people in the Soviet Union.
The lines were good when products were available, which they often were not. But it isn’t just communist countries where people have not been able to find things in stores. The economy of Venezuela has collapsed under their socialist rule and now people struggle to purchase many of life’s necessities.
And in other generally well-functioning economies with large socialist sectors, like the UK or Canada, you might have shortages on health care services given their non-market setup.
Markets are wonderful
This frustration from shortages on a few products is understandable, given our experiences in this country. But it should cause us to pause and appreciate the market system. We can walk into a store and buy things that we couldn’t possibly make on our own – like pencils, hand sanitizer, t-shirts, toothpaste, or toilet paper – and all for reasonable prices.
It is rare in the US when we cannot simply walk in a store and assume they have what they want. We often lose sight of this, but those not in market systems do not.
So amazing are markets that when then Russian President Boris Yeltsin visited a U.S. supermarket, he was absolutely astonished and thought that if people in the USSR saw what U.S. supermarkets were like that “there would be a revolution”.
COVID-19 is impacting the supplies of some products now. This isn’t normal and can be a bit scary.
But this is also a good time to reflect on the wonders of our market system and to be thankful.
Matthew Rousu is Dean and Professor of Economics in the Sigmund Weis School of Business at Susquehanna University.