The age of abundance was only a short-term artifact of the preliminary increase stage of globalization and financialization.
Global corporations didn’t go to all the effort to develop quasi-monopolies and cartels for our benefit– they did it to ensure dependably big benefit from control and scarcity. Not all scarcities are artificial, i.e. the outcome of cartels limiting supply to keep prices high; many shortages are genuine, and a number of these shortages can be traced back to the stripping out of redundancy/ several suppliers of commercial vital to improve effectiveness and get rid of competitors.
Recall that competition and abundance are anathema to revenues. Wide open competition and structural abundance are the least conducive setting for generating reliably adequate earnings, while quasi-monopolies and cartels that control limited materials are the ideal profit-generating machines.
The rewards to broaden the variety of providers, i.e. boost competition, are effectively zero. America’s corporations invested $11 trillion buying back their own stocks over the previous decade; that’s equal to the combined GDP of Japan, Germany and Italy. If adding new suppliers to the worldwide supply chain paid, a few of that $11 trillion would have made use of those huge profits.
The monetary reality is trying to compete with an established cartel that has actually recorded regulatory and political systems is a foolhardy waste of capital. If shooting up a new provider of essential solvents, and so on was so captivatingly lucrative, the why wouldn’t Google and Apple take a piece of their billions in cash and go make some easy cash?
The barriers to entry are high and the marketplaces are limited. A terrific lots of specialized lubes, solvents, alloys, wires, etc are vital to the manufacture of all the customer and industrial products that are sourced globally, but the marketplaces are narrow: makers require X quantity of a specialized solvent, not 10X.
Back in the excellent old days prior to globalization and financialization conquered the world, corporations lined up three reputable providers for each important component, as this redundancy minimized supply chain chokeholds. However to keep those 3 suppliers in business, you require to spread out the order book amongst all three. Nobody will keep a center open if it’s just used periodically when the primary provider encounters an area of bother.
And so now we’re all seated at the banquet of effects streaming from removing out redundancy and competitors, and ceding control of supply chains to quasi-monopolies and cartels. Scarcities are their source of earnings, and given that it makes no financial sense to spend a fortune developing a plant to make solvents, lubes, alloys, and so on in restricted amounts in markets controlled by quasi-monopolies and cartels, shortages are a permanent function of the 21st century global economy.
The age of abundance was only a brief artifact of the initial increase phase of globalization and financialization; now that the debt consolidation is total, scarcities make fantastic monetary sense.
By all ways thank Business America for wasting $11 trillion to additional enhance the leading 0.1% and insiders. Alas, there was no much better utilize for all those trillions than further enriching the already-super-rich.
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