The complexity of the supply and demand curve we learn the first day of Econ 101 goes well beyond what we've discussed here. One element, of course, goes into the question people keep asking, "Why aren't they building factories to meet the demand?"
It's not like they can snap their fingers and a factory appears out of nowhere. As always, easier said than done. It takes a lot of time to put one together. Years.
Let's just say that someone had a great crystal ball and at the very beginning of the shortage, they said, "We need a new factory." That factory still would not be on line producing ammo yet. My guesstimate, of course.
Suppose they decided to put a new factory on line about a year ago. Completion will be even further out before it's up and running.
Etc. etc.
Not to mention the cost of doing so. Suppose it costs $500,000,000 (yes, pulled that number out of my you-know-what) to put a factory together and make ammo. That's just the factory itself with all of the facilities and equipment. They still have to supply the place with components (also in short supply right now AND very expensive), they have to find employees to work the lines (also in short supply now and getting more expensive).
Then, once it's up and running (at full capacity), how long does it take before it starts turning a real profit to make back their $500,000,000 investment? Ten years? Five years? Twenty years? Hard to say, really.
Speaking of components and labor, the supply of those items is still compromised and the cost of them is not necessarily going to go back down. Someone has to make a factory for that, too. Ergo, the high cost of components and materials and labor for same will keep the prices of our end product high, regardless of how much ammo is now available. High prices will likely end up pushing demand down and then, where's the value of the new plant they just built?
What if they put all of that together and the demand for ammo starts to go away in a year? Is their investment lost? Probably not completely, but it then takes even longer to recoup if prices have to come down in order to keep the plant running like it started out.
And that IS the short version. If you crunch the numbers and your crystal ball is wrong, you're hosed.
Perhaps, if prices stay high right now, the ammo makes can save up the $500,000,000 they need in order to make the investment and then, after the decision is made to dump the cash into the project, we're still three years away from seeing the effects on our supply.
Build a factory? Yup. Easy to say. But it better be the right decision or the failure of it will ensure that we're all going to be worse off than before.
And this is just one aspect of the great ammo shortage. There is a LOT more to be considered than just the idea of needing more factory capacity. We could write a book along the lines of the prior posts in this thread.
--Wag--
It's not like they can snap their fingers and a factory appears out of nowhere. As always, easier said than done. It takes a lot of time to put one together. Years.
Let's just say that someone had a great crystal ball and at the very beginning of the shortage, they said, "We need a new factory." That factory still would not be on line producing ammo yet. My guesstimate, of course.
Suppose they decided to put a new factory on line about a year ago. Completion will be even further out before it's up and running.
Etc. etc.
Not to mention the cost of doing so. Suppose it costs $500,000,000 (yes, pulled that number out of my you-know-what) to put a factory together and make ammo. That's just the factory itself with all of the facilities and equipment. They still have to supply the place with components (also in short supply right now AND very expensive), they have to find employees to work the lines (also in short supply now and getting more expensive).
Then, once it's up and running (at full capacity), how long does it take before it starts turning a real profit to make back their $500,000,000 investment? Ten years? Five years? Twenty years? Hard to say, really.
Speaking of components and labor, the supply of those items is still compromised and the cost of them is not necessarily going to go back down. Someone has to make a factory for that, too. Ergo, the high cost of components and materials and labor for same will keep the prices of our end product high, regardless of how much ammo is now available. High prices will likely end up pushing demand down and then, where's the value of the new plant they just built?
What if they put all of that together and the demand for ammo starts to go away in a year? Is their investment lost? Probably not completely, but it then takes even longer to recoup if prices have to come down in order to keep the plant running like it started out.
And that IS the short version. If you crunch the numbers and your crystal ball is wrong, you're hosed.
Perhaps, if prices stay high right now, the ammo makes can save up the $500,000,000 they need in order to make the investment and then, after the decision is made to dump the cash into the project, we're still three years away from seeing the effects on our supply.
Build a factory? Yup. Easy to say. But it better be the right decision or the failure of it will ensure that we're all going to be worse off than before.
And this is just one aspect of the great ammo shortage. There is a LOT more to be considered than just the idea of needing more factory capacity. We could write a book along the lines of the prior posts in this thread.
--Wag--