Every time we go shopping store shelves are full of food, gas stations are stocked up on gas, car dealerships have no shortage of cars, etc. But who is ensuring that all of the complex processes required to maintain this state of affairs go smoothly? Is it just the free market doing its thing without any coordination? Or is there an office somewhere in DC where a big committee draws up a plan to ensure that no shortages take place in the foreseeable future?


3 Answers 3


Although the United States generally avoids economic planning (and even industrial policy), this is not to say the government leaves everything to the market. I don't have much expertise on this topic so I'm sure the following list will be incomplete. But here are some examples of ways that the federal government intervenes to ensure the continued availability of basic consumer products.

  • Fuel and energy: 1) The Strategic Petroleum Reserve is an emergency supply of crude oil maintained by the federal government. This system was created as a response to shortages in the 1970s. It currently has about 30 days supply. 2) The Federal Energy Regulatory Commission oversees the development of energy transmission infrastructure like pipelines and the electrical grid.

  • Food: 1) The United States government has intermittently held strategic grain reserves. However since the 1970s at least, these seem to have been for foreign aid, not domestic consumption. 2) The USDA's National Agricultural Statistics Service closely monitors the national food supply month by month. 3) Other parts of the USDA provide subsidies, technical assistance, and other forms of support to farmers which help ensure an adequate food supply.

  • General: The Federal Reserve tracks things like price inflation for durable goods, which may influence monetary policy and other measures.

Finally I will note that during the Great Depression and especially during the two World Wars, federal intervention in the markets for basic commodities was far more active. See for example the War Production Board.

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    Despite food reserves are "for foreign aid, not domestic consumption" I would bet that in case of a huge catastrophe, they will be used for domestic consumption.
    – vsz
    Commented Feb 25, 2019 at 5:50
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    It should be noted that most of these efforts are intended for crises, and that they don't typically affect what happens day to day. I can't actually remember when the last time the strategic oil reserve was used, but I do remember debates when it was reduced (it affected Al Gore's presidential campaign).
    – Joe
    Commented Feb 25, 2019 at 12:18
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    Nearly every country has strategic oil reserves. Germany actually used it last summer as the river Rhine had to little water to transport oil in the south of the country. This led to a cost increase of around 50%. To stop this trend and guarantee supply for the industry in the south, the government used the oil reserves.
    – miep
    Commented Feb 25, 2019 at 13:03
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    @Joe I think I remember that during $4 gallon gas, around the later half of President Bush's 2nd term, there was a symbolic release of fuel from the strategic reserves. There was fear in the news that the US was in danger and a tiny, temporary dip in gasoline prices, what really lowered prices was allowing fracking and drilling. Commented Feb 25, 2019 at 13:39
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    You might add that the Energy Information Administration (of the Department of Energy) collects and publishes information so that the market gets info on where and when to increase supply and refineries know where they might want to adjust demand.
    – H2ONaCl
    Commented Feb 26, 2019 at 0:23

To piggyback on the wonderful examples of US Reserves for crises in another answer, the short answer to your question is, roughly, no. More specifically, this question:

But who is ensuring that all of the complex processes required to maintain this state of affairs go smoothly?

It is, in fact, the free market that makes sure all these complex processes go smoothly. There isn't any government body coordinating avocado farmers in Central America with distributors in Florida to purchase those avocados and get them to a Whole Foods near you.[1]

As described in another answer [linked above], there are reserves set aside in case of major crisis to ensure a shortage doesn't spiral out of control, but they're for just that - crises. With the exception of providing subsidies or tax breaks to incentivize production of some goods (corn subsidies, renewable energy tax breaks), the US government doesn't take an active role in controlling the market.

The government notably doesn't take action to help with general "shortages" - there's no backup of Romaine for when an E. Coli outbreak occurs, they don't manage the supply of your favorite cola to make sure there's no shortage, they don't direct the supply chain for the new iPhone to guarantee they don't run out. All of that supply chain management is done by the individual companies - sellers (due to sales numbers, population counts, research, etc) think they need [some amount] of the product(s) they're selling, they buy that much from a supplier (who is thus a seller themselves, and may need research on how many to buy/produce), and so on.

1: This is purely for example, I'm not sure if there's any distributor in Florida, or if the maybe-exists distributor sells to Whole Foods.

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    To add another level to your last paragraph, one big reason you don't need central planning is that the market has competition and redundancies. Companies have a large incentive to keep their own supply chain flowing smoothly (supply problems mean you can lose a lot of business). Even if someone messes up and Cola Company A's supply chain completely collapses, you can still buy cola from Companies B and C. There's rarely a single point of failure any more, so you rarely see critical shortages outside of unforseeable crises.
    – bta
    Commented Feb 26, 2019 at 1:19

"Any planning"? Then the short answer is Yes. Planning doesn't have to be a wholesale Soviet-style command planning.

Contrary to popular belief and some comments above, free market is remarkably good at alleviating short-to-medium term crises. The 'Soviet'-style response to anything unexpected is, well, you have a shortrage -- until the next five-year plan kicks in (at best). In free market, you may have exorbitant prices, but at least some way of getting the stuff. And then alternatives will spring up, the higher the prices, the quicker.

But like with many natural processes (e.g. evolution), strategic thinking doesn't happen automatically. If we have a goal and a forecast power, we can do better. I would divide the measures into three categories:

  • Stockpiling of the most critical resources. The US Strategic Petroleum Reserve has already been mentioned as an example. But despite the name, this is not so strategic in reality -- rather a patch to buy time.
  • Accumulating financial resources to be able to get the required resoruces even at the speculative crisis prices.
  • Fostering and diversifying industries that provide essential resources. (Such industries don't necessarily have to be local; on the international scale, this may involve diplomacy and, by extension, even war). Take the recent example with the updated list of critical minerals.

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