Observer  /  Business  /  Culture

Supply chain issues are getting worse — and climate change is a main culprit

Original publication by Matthew Rozsa for on 14 May 2022

The baby formula shortage is one manifestation of a supply chain crisis worsened by climate change

Cargo ships anchor on the Rhine near Bonn harbour. Navigation on the Rhine in Cologne has been suspended due to the high water.
(Marius Becker/picture alliance via Getty Images)

As the economy continues to falter, the name of the game is product shortages. Supply chain disruptions have left grocery store shelves bare, forced gamers to suffer console and headset shortages and led to microchip shortages across the electronics industry. Higher prices for consumer goods are partly a result of such shortages. Now that Republicans are drawing attention to a baby food shortage, the question seems to have been politicized: Should the supply chain issues be blamed on the party which holds power?

The answer is that our supply chain issues are global in scope — and in more ways than one. The product shortages are caused by the fact that most of our goods are transported across long distances to be used for manufacturing, sold or otherwise utilized. Imagine a giant spiderweb stretching all across the planet. Like a baseball smashing through each strand, unexpected problems can destroy key routes that allow our supply chains to operate.

That is why climate change in particular is expected to lead to many more product shortages. Dr. Thomas Goldsby, a professor of supply chain management at the University of Tennessee — Knoxville’s Haslam College of Business, tells Salon that volatile and unpredictable weather patterns will fundamentally change our economy.

“The frequency and severity of these unpredictable weather patterns alters consumer shopping behaviors and also the provisions that companies take to address them,” Goldsby explained. “Companies have to build in more redundancy in their production and distribution networks to compensate for this volatility — and that all comes at higher costs.”

In addition to altering consumer behavior, scientists agree that climate change will alter the physical landscape in a profound and transformative fashion. For one thing, sea levels are expected to rise; even as that happens, heat waves will cause widespread droughts. Both of these things will have consequences for the economy.

“Take the alarmingly low levels of Lake Mead that supplies vital water to parts of Nevada, Arizona and California,” Goldsby pointed out. “Water supplies are cut and farms lack essential hydration to make them viable. Quality of life for non-farmers gets affected, too. I’m hearing the term ‘climate refugees’ with more frequency.”

As is so often the case when it comes to climate change, marginalized communities are expected to take a disproportionate hit. As Shahram Azhar, an assistant professor of economics at Bucknell University, wrote to Salon last year that “climate change has a demonstrably negative effect on the planet’s natural ecosystem (pests, coral bleaching etc.) which is pivotal for agrarian production. For working-class people, this basically means more food insecurity, malnourishment, and poverty through rising food prices on the one hand and instability in jobs and incomes on the other.”

“Basically starting around the 1970s and 1980s, there was a dramatic acceleration of something that had been going on for a long time — the movement of jobs.”

It is tragically unsurprising that climate change, is going to hit marginalized groups most hard when it starts to shut down supply chains. These expansive supply chains exist in large part because wealthy interest groups wanted to exploit cheap labor, says University of Massachusetts Amherst economist emeritus Richard Wolff. That is why the supply chain breakdown can be described as a “global” problem in more ways than one. Not only is it heavily impacted by global events like climate change, but supply chain breakdowns exist because of globalization.

“Basically starting around the 1970s and 1980s, there was a dramatic acceleration of something that had been going on for a long time — the movement of jobs, initially in manufacturing although it has since spread to services as well,” Wolff told Salon. “And the impetus was profit, as always. Profit is the bottom line. Profit is the goal of enterprise because that’s what capitalism does. And thanks in part to the technology of the internet and the technology of jet travel, which became normalized in those years, it was now possible to take advantage, and there were political conditions as well of much cheaper labor elsewhere in the world.”

“Capitalists are always stimulated, when wages go up, to find a workaround, a way to avoid paying them,” Wolff explained. 

As wages in Western democracies like the United States went up, companies realized they could increase their profit margins by manufacturing different products at various points all over the globe. With transportation and communication costs down, this would prove cheaper than using domestic labor. Once the inevitable lengthy supply chains were created, businesses could then claim that this was an inevitable outgrowth of the economy, as opposed to being the accumulation of deliberate choices that would likely not have been made if our global economic system wasn’t profit-driven.

“Capitalists are always stimulated, when wages go up, to find a workaround, a way to avoid paying them,” Wolff explained, elaborating that this spans from automation to outsourcing jobs. In the process, they leave consumers vulnerable to disruptions caused by environmental issues — and this even predated the age of climate change.

“When we created dust bowls in various areas back in the 1920s and 1930s, it permanently altered the landscape of this country in terms of where people live and work and so forth,” Wolff explained, referring to a series of dust storms that swept the American midwest due to poor agricultural practices. “Once you make the thing global by moving abroad, then you obviously become vulnerable to droughts and floods and anything else that happens now, not just in the continental US, but on a global scale. You either have to take the steps to avoid climate change, or you spend the money to accommodate the adjustment process that is involved.”

Wolff added, “The problem with capitalism is these issues take time and money, and they don’t want to do either.”

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