economics and toilet paper

Gasoline prices in the teeth of incoming hurricanes are an excellent example of how price signals clue people to minimize their purchases where the supplies are rapidly dwindling and unlikely to be replenished at normal prices.

Instead of having the first two motorhomes wipe out the supplies, faced with significantly higher prices, they buy just enough to get out of the evacuation zone, leaving more for the next arrivals at the storm-front gas station. Each purchaser buys only what they need to get out of the impact zone and out to suppliers where prices are normal. At a high enough price, someone will truck fresh supplies of gasoline into the teeth of the incoming storm, replenishing the depleted supply.

No central authority has to guess what each consumer needs, conjure up a rationing plan, or send in armed guards to enforce mandated limited purchases . With what real economists call “proper price signals” supply and demand remain in balance. In controlled economies, central planners overlook crucial components of complex systems creating excesses adjacent to shortages. Maybe it is shortage of shipping containers, yeast, bakers or ovens that makes bread scarce. It is just as likely to be too many of that next year while some other ingredient falls short.

This is the beauty of free markets. Unfortunately, comprehending pure supply and demand has been discouraged by those who would prefer centralized government, a powerful ruling class, subordinate serfs, and who have dedicated themselves to mainstream mal-education.

The hokum that is Keynesian Economics justifies a ruling class empowered to print money out of thin air, and live large while the serfs live small. The centrally-controlled education indoctrination system is entirely staffed with Keynesians and deliberately devoid of the Austrian Economists whose truth does not serve the elites.

In today’s world of toilet paper, nobody dares to use supply and demand. Distributors and retailers grok the low level of understanding that is currently mainstream. Raise the price to “market clearing” in real economic terminology and you would be vilified as a scalper, pirate or other pejorative. Yet THAT is what would immediately bring supply and demand into balance.

Sadly, if the masses don’t get it, NOBODY DOES… get anything.

Welcome to central planning.

This is our future.

Thanks to programmed ignorance.

The Toilet Paper Supply Chain!

Stores replenish supply on generally stable demand signals and patterns. Demand is generally neither seasonal nor sporadic. Manufacturers make toilet paper based on those demand signals in a very predictive manner.

The majority of toilet paper sold in North America is manufactured in North America. Given that there has not been a massive shutdown in America factories the lack of supply cannot be attributed to temporary factory closures. As it is the manufacture of toilet paper is a highly automated process with relatively few employees required to oversee such an operation anyways.

There is also nothing particularly challenging or unique about the manufacture of toilet paper nor its Supply Chain. Any problems with manufacturing, aside from industry wide factory closures, would typically be resolved very quickly…

So even though day to day consumption of toilet paper has not changed people have elected to stockpile and hoard any supply of toilet paper they can get given a perception that there may be a shortage. This has created a somewhat self-fulfilling situation. There actually is a short term shortage on store shelves now because this level of paranoia has fed on itself. As people have seen less product on store shelves they have become increasing fearful of a lack of supply…

Remember, at some price level, manufacturers, distributors and retailers would find a way to increase the amount of product available … were that price increase allowed by the masses.

GIVEN that consumption is linear, and that personal supplies were suddenly, dramatically increased, there will soon arrive a stabilized point where those who stocked up in fear completely STOP buying toilet paper for A WHILE. In the very near future the supply chain’s nature to produce steady flows of product will run into the beaver-dam of REDUCED DEMAND while the temporarily-fearful run their TOILET PAPER HORD back down to more reasonable levels in their less-passionate expectations.