All of enfield's Comments + Replies

His claim that a shortfall in supply can cause a shortfall in demand makes sense. But he goes beyond that and claims without any real justification that every shortfall in demand is the consequence of a shortfall in supply, which contradicts modern economic thought. One reason that quantity demanded might decline other than a production problem would be if there's an increase in production by a competitor whose goods are superior or cheaper than yours. Another potential reason would be an increase in uncertainty - if say, a country is on the brink of war, people in that country will be inclined to hold on to their money rather than to spend it on luxury goods, and this can cause an economic contraction. I guess in a roundabout nonfalsifiable kind of way it might be hypothetically possible that a shortage in supply on the other side of the globe is the indirect root cause of the war, but this isn't very helpful for figuring out anything useful about the economy even if it does happen to be true, and we have no reason to think that's so. He kind of comes close to conflating "shortfall in supply" with "scarcity", but those are two different concepts in economic thought. A shortfall in supply is someone not producing as much as they ought to have to maximize their company's profit. Scarcity is the idea that no matter how much is produced people will always want more. Disclaimer: barely paid attention when this was explained to me in class.