this is richard wolff from democracy at
work with a response to another ask prof
wolf question from our patreon community
and this question comes from dr andrew
allison
dr allison asks about the extraordinary
increase in shipping costs
around the world mostly shipping by boat
by freighter
and
he wants to know what it's about what
caused it what the consequences are
what's likely to happen
so first let's talk about it
yes dr allison you are absolutely right
the prices of long distance shipping
particular have gone through the roof
up enormous percentages 50 100 200 over
the last year and particularly over the
last few years
the conventional explanation
is covid and the pandemic
and i would like
humbly to suggest that that's ridiculous
did the pandemic have an effect of
course it did the pandemic affected
everything across the world economically
politically
you name it so to cite the pandemic is a
little bit silly because the pandemic is
part of the explanation of literally
everything that happened
so what else was going on
and the answer you will not be surprised
to know is about capitalism how
capitalism works is the crucial question
because you know a public health
disaster a covid
a pandemic
these are like
endless surprise
big issues
that disturb international trade
you know like a tsunami someplace
or a global economic crash that's not a
public health disaster or climate
changes and so on
wars
political disruptions
it is a commonplace
for any economic system
to understand
that there are unexpected
irregular
problems that arise
people understand that that's why
they take
precautionary steps they buy an
insurance policy in in the event
something happens they set aside some
money for the proverbial rainy day
companies keep inventories so that they
can use materials even if they can't get
them in the market and so on
any economic system is judged and quite
rightly by how well it prepares
and how well therefore it copes
with those things that we don't know
exactly when they'll come but we know
that sooner or later the storms the wars
the viruses the climate changes will do
what they have always done in human
history
so here comes the pandemic
and capitalism
did not prepare for it and couldn't cope
with it and i'm going to use the
illustration that dr
uh allison asked about namely shipping
so here was the problem
a
when the pandemic hit
there were
lots of containers those big metallic
objects that are used now for most
global shipping but they weren't in the
right place
see it turns out that if you look at
where the containers are needed
particularly to move things from china
to the united states and from china to
europe and other places too but those
are big major routes
if you're going to handle an unexpected
crisis you have to store these
containers as an inventory and why
because look what happened when the
pandemic hit
it hit first in china so they had to
close a lot of their ports to lock down
because that was their strategy which
worked very well you know china has only
lost 8 000 people to death from covid
and it's a country four times larger
than the united states which has lost
seven hundred thousand well there
weren't containers that were in the
places we need them we had them but they
weren't in the right place you know why
because the shipping companies didn't do
that they didn't risk the profits that
would be lost by storing an inventory
they thought they were being clever they
weren't they were being stingy they were
being careful of their momentary profits
which is the way the capitalist system
trains them to be
so there weren't enough and they weren't
in the right places but that by itself
wouldn't raise the price
because we could have decided if we had
a rational economic system that if we
had a problem of not enough containers
in the right places to conduct the
shipping that we normally have so we
would have to reduce the amount of
shipping which indeed we did
but we could have made a decision what's
the most important kind of shipping for
example
things that would help us fight covet
should have gotten a priority
movement of goods that are crucial for
public health for the growth of children
all the things any rational society
could have as its priorities we didn't
do that the europeans didn't the
americans didn't the chinese didn't
either internationally
so what did happen
capitalism stepped in and when there was
a scarcity of shipping containers up
went the price all the people who sit on
shipping containers who owned them who
used them saw this as a market
opportunity
jack up the price and how does that work
it means that when the container is
scarce
and the price shoots up the only people
who get to ship stuff are the people who
are rich enough to pay the higher
shipping prices
not what the societies need not what the
people want not what the future requires
no no no no it's simply a matter of
giving whatever is scarce in this case
shipping containers to the richest who
can pay the highest price the shipping
companies jack up the price and the only
one left who can afford it are the
richest that's how markets work
they allocate scarce
resources to those with the most money
yeah once again the system serves the
rich at the expense of a rational
social decision the problem of shipping
the outrageous prices and profits earned
by them
is not because we had a pandemic it's
because the capitalist way of
not preparing and handling pandemics is
the disaster we need to
recognize and attend to
if this sort of alternative explanation
different from the mysterious
supply chain problems which appear in
the newspaper as if you couldn't explain
the way i just did what they are and can
only talk about them because you're kind
of afraid of telling people what they
really are if this kind of a message
is what you like we think needs to get
out there to change how we understand
our economic problems and to take this
society in a new direction
then we ask you
partner with us
do what you can to help with the
financial resources that will allow me
and the team together that is democracy
at work to spread and to develop this
message in every way
modern society makes available
thank you