Toilet Paper Economics: Emergency Capitalism Still Better Than Normal Socialism

By Richard Morrison of CEI.

"There are quite a few hot takes circulating at the moment about how grocery stores temporarily running out of toilet paper amid the current coronavirus pandemic is a stinging indictment of a capitalist economy. Most of those takes are not serious enough to be worth refuting, but apparently it bears repeating that consumer choice in a free society during difficult times is still better than the options that are available under normal conditions in a socialist society.

I blogged a while back about how most Americans who tell pollsters that they approve of “socialism” aren’t talking about the life they would experience under an actual socialist regime. When they say they like socialism they mean they support affordable healthcare and higher education, not government control of every factory and workplace. As Marion Smith of the Victims of Communism Memorial Foundation wrote for Politico in 2016, most young Americans simply have no memory of the privation and repression that actual socialist regimes were so well known for during most of the 20^th century:

…a 2011 Newsweek survey…reported [that] 73 percent of Americans “couldn’t correctly say why we fought the Cold War” in response to a question taken from the official test for U.S. citizenship. Ignorance of socialism and America’s decades-long struggle against it has become the norm, and the data suggest this norm will only harden as a generation of Americans pass away and national memory fades.

It’s especially galling to have momentarily bare store shelves during a national medical emergency cited as somehow a failing of a market economy. One of the most frequently noted aspects of life in socialist societies like the old Soviet Union was precisely their frequent and severe shortages of consumer goods that, in the United States and Western Europe, were universally available. An entire genre of folk humor arose in the Warsaw Pact nations around the frequent experience of having to wait in line for hours to buy the most basic household supplies. It was even said that, because so many stores were out of supplies so often, people would run to join any long line they saw—without even knowing what might be for sale at the front of it.

When people are worried and in an emotional state, some of them are going to engage in panic buying, causing temporary shortages. The men and women who make the toilet paper, however, are still hard at work. Temporary shortages in certain markets and retailers are being quickly filled, as Sharon Terlep of The Wall Street Journal reported this week:

Charmin maker Procter & Gamble Co. and Cottonelle maker Kimberly-Clark Corp. say they have ramped up toilet-paper production and are able to make enough to meet demand. Kimberly-Clark has started posting pictures of warehouses full of toilet paper in some markets. The problem, the manufacturers say, is getting the product shipped to warehouses and retailers, and then onto store shelves, quickly enough to keep up with sales.

The stockpiling of a commodity like toilet paper also has its own saturation curve, since despite heavy demand, nothing about the coronavirus epidemic is causing it to be used at a higher rate than normal. Even the most nervous household manager will stop buying when they no longer have any spare storage space for more. As the Washington Post’s Todd Frankel reported last Friday, stockpiling of humble but essential supplies like toilet tissue has to do with fear and anxiety, not any objective economic reality. Having a government agency control the means of production is unlikely to change that.

Far from being an example of a market economy failing, the limited, short-duration shortages of a few consumer goods show modern industry doing an excellent job. No system of production can respond instantly to massive shifts in purchasing behavior, but a decentralized system with many producers and competing retailers is more likely to deliver nimble responses. If we want to see real shortages of essential products in today’s world, look at an actual socialist country. Journalists have been reporting on toilet paper shortages in Venezuela since 2013."