Global Supply Chain Crisis: Reality or Scapegoat?
Updated: May 26, 2022
It seems like the global supply chain just can’t catch a break. Just as COVID deaths and hospitalization rates are declining, the Ukraine war and resulting sanctions on energy threw another monkey wrench into the much-maligned global supply chain. It is useful to step back from the day-to-day crises of baby formula shortages, record diesel prices, and other impending doomsday scenarios and examine the actual performance and outlook of the supply chain, the state of globalization, and the implications for corporations and policymakers.
Global Supply Chain Drives Global Wealth
The global supply chain is a self-organized network connecting suppliers via layers of intermediaries to consumers and is a miracle of modern technology. It has enabled new business models and raised the standard of living throughout the world dramatically through Ricardian specialization to an almost unimaginable level. In 1990, 1.9BN or 35% of humanity lived in extreme poverty vs. 650M (or 8%) in 2018. The fact that 1.2BN people have been raised out of poverty is a testament to the success of global capitalism and the supply chain, which to give just one example, builds iPhones with components sourced in 43 countries.