Short Supply

The first days of the coronavirus pandemic were an ominous time. But what many remember from those days is the stampede for toilet paper. Remember how the supply ran out for about a month? A lot of people were stockpiling it. So why didn’t factories just step up output to meet the increased demand?

The reason is that Covid, in addition to causing immense loss of life, disrupted the world’s supply chain of products and services. And a broken supply chain creates a domino effect. Going back to toilet paper: We think of it as a product whose demand is very stable. Factories, for their part, produce a constant, steady supply.

But when a panic sweeps all the shelves clean and quickly empties warehouses, it can take time to restock. I once worked in a factory in the Negev that produced clear adhesive tape. Older workers would recount how during the 1990 Gulf War, civilians swarmed the gates offering to pay any price for a roll of adhesive tape to seal their windows. (Israel was bracing for a chemical weapons attack from Saddam Hussein). But most of the factory machines were geared toward production of industrial tape, not short rolls for home use. As a result, a big shortage of sticky tape ensued.

Strange things happen when supply chains are broken. For example, cash registers ran out of small change at the height of the pandemic. I haven’t read a satisfying explanation for this yet, but when I visited Philadelphia in August 2020, one store was offering customers a free coffee if they paid a small part of their bill — I think it was $5 — in coins. People were leaving home much less, paying with cash less, so the natural currency circulation was disrupted.