Don’t Confuse Shortage and Smurfage
In a sense, there is a shortage of everything, for everything is more expensive than we would like. To consume anything, one must forego more of something else than he would prefer. The producer or the shopkeeper regrets that what he sells does not fetch higher profits but he could argue that this is because his inputs are also too expensive: there is a shortage of them too.
This concept of shortage, however, is very misleading because it confuses two things that are useful to distinguish: a high price on the one hand and, on the other hand, the impossibility of obtaining something at the market price—that is, at a mutually agreed price with a seller. If people insist on using “shortage” in the sense of “too expensive,” we would need another word to label the phenomenon whereby a good is difficult to obtain because a capped price does not incite producers (including middlemen) to supply as much as buyers want at that price. In other words, we would need a word to describe what economists call a shortage.
I’ll stick to the economic usage of the word “shortage.” I suggest that it’s the others who should find a new word for a situation where many people want more of something but are not willing, or perhaps able, to pay enough to get it. For the new word, I propose the neologism “smurfage.” I borrow the word-crafting technique from the Smurfs, who used their group-identity label to fuddle any or most words, following their French precursors, the Schtroumpfs.
I was reminded of the fuzzy notion of shortage—as a mix of shortage and smurfage—when I read an article of Canadian political columnist John Ivison (“Liberals About to Find Out Why Open-ended Deficit Spending Is So Dangerous,” National Post, March 4, 2020). Speaking about the covid-19 epidemic, Ivison writes:
Sharp declines in production in China and elsewhere, as workers stay home, are likely to result in supply bottlenecks and shortages.
A few lines before, he said:
The coming slowdown may look more like the oil supply slump of the 1970s, with its line-ups in stores and gas stations, than the demand side recessions of the more recent past.
The Canadian columnist may have watched too much American TV. After the oil shock of 1973, Canadians did not experience line-ups at gas stations for a simple reason: contrary to the US government, Canadian governments did not cap gasoline prices, which shot up according to (reduced) supply and (unchanged) demand, thereby avoiding a shortage. In Canada, the smurfage, inseparable from the human condition, simply became worse in the case of gasoline. What happened in the United States was a shortage, because prices were prevented by law to adjust.
In brief, except for a very temporary one, a shortage happens when the government tries to prevent a smurfage. Smurfage is an inescapable feature of the human condition; a shortage is a consequence of a government or other coercive intervention.
If the covid-19 disruption gets serious, even without federal interventions, the same thing (that is, shortages, not mere smurfages) is likely to happen in the two-thirds of American states with so-called “price gouging laws” (see my post “Emergency Shortages in Altruistic California,” October 14, 2019). In fact, it may already be happening with some products whose producers fear they won’t be allowed extra profits if they make extra efforts to bring more on the market. At least in California, the declaration of a state of emergency on Wednesday (followed by two other states yesterday), has set in motion the “anti-gouging” prohibitions of the Penal Code.
As for the “line-ups in stores” that Ivison refers to, I, for one, don’t remember that, neither in Canada nor in the United States. Did I miss an elephant? Or did the Canadian columnist watch too many TV documentaries about the Soviet Union and Venezuela?