Central planning in the Soviet Union caused massive shortages.
But government incompetence and corruption had its silver lining.
For instance, housing shortages kept people cooped up in small crowded quarters. But that meant tight-knit communities formed, where people could rely on one another for mutual aid during the hard times.
And there were plenty of hard times.
People couldn’t rely on the government to deliver enough food. So each community also grew staple food products.
This was terribly inefficient. Without massive scale, more energy had to go into producing each calorie. But no energy had to go into transportation and logistics.
And the central Soviet government just could not be relied on for logistics and transportation.
So local food production kept the starvation and malnutrition in the Soviet Union from being much worse.
The United States, on the other hand, has massively scaled efficient agriculture. But it takes 12 calories of fuel energy to transport a single calorie of food to the consumer.
Nassim Nicholas Taleb explains this in his book Antifragile and comments, “One can imagine what could happen to the United States, or Europe, in the event of food disruptions.”
We’ve been living in a fairly competent society for some time now, when it comes to supply chains.
We’re so efficient that a good chunk of our food and medicine supplies aren’t just shipped across the United States. They are shipped across the world, and still arrive at the grocery store and pharmacy extremely regularly and reliably.
But what happens when a trade war, a war war, or say, a global pandemic threatens supply chains?
And what happens when the problem is compounded by the fact that the producer of those goods is an authoritarian communist regime in China, which sort of hates America?
Say, for argument’s sake, that the world is in a record amount of debt, banks can’t cover 1/20th of it, and the government is planning to ramp up the debasement of the currency.
You almost start wishing that we weren’t so efficient…
Because as we have grown global economies of scale, local supply chains have been neglected.
This isn’t a Covid-19 recession we are entering into. Covid-19 is simply the pin that pricked the bubble. It is forcing the world economy to come to a reckoning with unsustainable debt and monetary policies.
We’ve been thinking global for so long that it seems obvious the pendulum should swing back during a correction.
Perhaps entrepreneurs should be thinking about how they can serve their local communities while the world goes through a painful, but necessary, economic reorganization.
Crisis brings opportunity. And I don’t mean that in a soul-sucking vampiric predatory way.
People have very real needs, like eating, and the entrepreneurs who figure out a way to fulfill those needs will be rewarded for the great services they provide to the community.
Many people seem to be focused on loading back into the stock market at the right time to become rich.
And that’s fine. That can be one strategy when the time is right.
But focusing on the needs of the local community is something you can do right now.
If you’re young, healthy, and not at risk of carrying the virus, you could go out to fill some of the volunteer needs in the community.
In the process you will have a first-hand look into the problems that need solving– now and in the coming months and years.
The movement of people and goods worldwide just became more complicated.
It follows that there will be opportunities in reinventing local supply chains.
And with millions of people out of work, it’s not so crazy to imagine a resurgence of American manufacturing and production.
What makes people rich and powerful over the next few years might have less to do with spreading a product globally, and more to do with securing a product or service locally.
It’s the same principle, on a larger scale, behind why it makes sense to store some of your gold and silver at home in a safe where you can easily access it in an emergency.
Locally available supplies are necessary in an emergency, when you won’t be able to access gold storage in Singapore, manufacturing in China, or even food grown in the midwest.
This is just some food for thought for the cooped up entrepreneurs out there. You can absolutely get started on making some big moves now.