Western capitalist economies don’t really do shortages.  There are a few stand alone exceptions such as a music festival or a sporting event, where demand so outstrips supply that queues form.  But for the most part – as we saw last week with the eye-watering rise in wholesale gas prices – when something is in short supply the price increases; and when the price increases enough, the queues disappear.

In economics, this is the difference between demand and desire.  I might, for example, desire a new sports car or a country mansion.  But since I do not have anything like the discretionary income to buy these things, I do not contribute to the economic demand for them.  And unless someone is going to offer them for sale at a ridiculously low price, I doubt that we are going to see queues forming any time soon.  As Tom Chivers at UnHerd puts it:

“Over the long run, the market normally solves coordination problems like this, reasonably effectively. If lots of people want some resource, then the people selling that resource realise they can make more money if they raise the price. At the higher price, fewer people are willing to buy it, but the seller makes more money per unit sold. And, in theory, they can keep raising the price until the lost sales start to outweigh the gain per unit.”

When we witness queues piling up outside filling stations across the UK then, we might be correct in assuming that something – or most likely some things – are being done to artificially generate a shortage where none previously existed…

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