Yves here. I have to confess that I’d never considered rationing as a possible response to Covid-induced economic disruptions. Most assume things will revert to a semblance of the old normal in at worst a year or two, save with more working from home and less business travel. But recall that the Russian flu of the late 1800s took roughly 7 years to mutate into a tolerable form. We are presently stuck in variant whack-a-mole. Delta has diminished the efficacy of our current vaccines, particularly with respect to low-level infections, so that the virus continues to spread. Even if Pfizer et al launch a Covid-focused booster, by then who knows if Delta will still be the dominant variant (our GM is giving us near-daily e-mail updates on new variants and where they differ from extant ones).
Admittedly, nasal vaccines are under development, and they have the potential to be game-changers, since they could achieve near-sterilizing-immunity-level reductions in contagion. But the earliest they would be ready to launch is late 2022. And if they are less successful than now hoped or wind up being on a slower timetable, we could be stuck in our new normal for quite some time. And that new normal includes supply chain disruptions which we are seeing in all sorts of places, like super pricey new cars with missing features due to missing chips, to more than occasional missing items in grocery and drug stores.
Letting Mr. Market, as in prices, handle this mess is a default response. But if shortages become persistent in “basic” items, we may see rationing. We already saw some of this sort of thing informally in early Covid, such as grocery stores limiting purchases of hamburger to 2 lbs, and in the oil crisis, where US drivers could buy gas only every other day, depending on whether their last license plate number was even or odd.
Rationing is far more likely to occur in the UK, which is facing Brexit disruption on top of the Covid sort, and also by virtue of having large-scale rationing as part of its collective memory. But it is not inconceivable that it could come to the US too….particularly since The Jackpot is nigh.
By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK
I was in discussion with one of the very first baby-boomers yesterday. He was born just after the Second World War. What he suggested was something very interesting. He, and his generation, remember rationing, which lasted well into the 1950s. And, he suggested, maybe they will now see it again. I admit I had not thought about this until he suggested the idea, but in the intervening hours it has occurred to me how pertinent his comment might be.
Leave aside the fact that we have a Covid crisis still, although you would not believe it given the behaviour of so many in the UK. Instead focus on food supply crises in many forms, a general logistics crisis, a power crisis, political crises, a threat of enforced short working, and an economic crisis as many in the country will not be able to make ends meet through no fault of their own which may well be exacerbated by the fools at the Bank of England demanding interest rate rises and suddenly we are looking at a country in melt down.
That much of this has been self inflicted, by Brexit, by enforced undermining of working standards, by false business models that have ignored the importance of resilience, is beside the point for the moment. It is happening. And there is no sign that it is likely to get any better any time soon. Indeed, the suggestions are that it can only get worse and all we are seeing at present is the start of the chaos.
If this is true (and I accept that some (I stress, some) of these issues might resolve without full blown crises developing with regard to them) then there is a fundamental issue to be addressed, which is how the country keeps going. This, of course, is the ultimate test of resilience. That test arrives when markets fail and alternative measures have to be put in place to make sure that everyone can get access to what they need, even if they cannot have access to all that they want.
Does that mean rationing should be considered now? If not, why not, when it seems that we are on a one-way street to chaos at present? Wouldn’t it be at least wise to presume that things might get worse and that appropriate measures might be required to ensure that everyone can access the basics of life?
We have, of course, done this before. It happened in WW2. We are not at war now. I hope we never will be again. But, in the face of a similar threat to supply chains why shouldn’t the reaction in be the same – that need should overcome ability to pay so that the wellbeing of all can be guaranteed by rationing essential commodities?
This would, of course, indicate the failure of neoliberalism. Its demise would be far more dramatic than the so-called winter of discontent in 1978/79 that saw out the post-war consensus, when uncollected rubbish was the big issue (although I note the Guardian reporting this morning that a refuse collection crisis may also be on its way). But the real problem on this issue is that there is nothing to put in the place of neoliberalism as yet. Well nothing except a Green New Deal that is, because the left has no other ideas at present. So at the heart of all this there is an intellectual crisis, which is that of the failure of many on the left to consider any real alternatives to the market.
In the absence of such alternatives pragmatism will be required. I wouldn’t rule out rationing as a result. In weeks to come many might begin to welcome the idea. I sincerely hope someone has a plan for it.