The Great Toilet Paper Shortage of 1973

I predict shortages ...

I remember the Great Toilet Paper Crisis of 1973. I did my normal shopping for the week and noticed that there was not a roll of toilet paper to be found. While the early 70's was a time of shortages, especially gasoline, this struck me as very odd. What I did not know is that the evening before, Johnny Carson on the Tonight Show in his monologue on December 19, 1973 had said this:

"You know what's disappearing from the supermarket shelves? Toilet paper. There's an acute shortage of toilet paper in the United States."

While there was in fact no shortage, panic buying started, and it took weeks to replenish the stock across the nation. We do not realize that we are relying on a supply chain with little depth.

But there was a more serious shortage of gas caused by government actions:

As oil supplies contracted because of the embargo, the United States held prices artificially low. Government officials, fearing a return of the previous year's frigid winter in the Northeast, then ordered refineries to produce an oversupply of heating oil instead of meeting the demand for gasoline.

If you cannot import oil and make a profit, guess what--you will not import oil.

While I do not expect an apocalyptic future like a disaster movie, as I mentioned in a previous blogpost, it just seems prudent to have a little bit of food stored back for emergencies. Just do not tell anyone you are doing it. 

If the dollar drops, and the government tries to help the poor by price controls, there will be shortages. This is already starting in the medical area as some doctors will not accept new Medicare patients. This means that those doctors that do accept Medicare will have longer waiting times to see the doctor. This can only get worse.

The best way to allocate scarce goods is to permit prices to rise.  If this is allowed to happen, then while there may be spot shortages, the market will take care of it.

No Man Is An Island

I have always had misgivings about the modern survival movement. Something did not feel right about it. When I was reading Charles Hugh Smith's blog,  I realized that he understood my misgivings and expressed them in a helpful way. His point was that from his personal experience from growing up in a rural community, he thought it naïve to plan to suddenly show up in a rural area filled with strangers and expect to be well received. So the big flaw in the modern survival movement is that many of in the movement do not realize that no man is an island. If troubling times come and you expect to show up in Podunk, Idaho, and be accepted, you will be disappointed. Folks, that is not going to happen. This fits well with my experience.

I graduated from the University of California at San Diego in 1976 with a degree in History. Older readers will remember 1976 as a trying time economically. One of my friends with a degree immigrated to New Zealand to teach. While I would not have minded teaching history, such jobs were hard to get unless you immigrated. Many college graduates face this exact situation today, so I remember and sympathize. I decided to go to Missouri and raise cattle with my Father. I remember my best friend’s graduation party I attended. His grandmother was shocked to think about me, with a degree in history, becoming a cowboy.

Of course she was right, I knew nothing about cattle ranching. But at least I knew that I knew nothing. Gradually I learned many of the needed skills: running the tractor, mowing hay, basic animal care, and so on. While I never learned some of the more difficult ranching skills like roping, most of the needed skills became mine.

I have many stories about my transition to a cowboy. I was a little on the heavy side even then, so I would get in the back of the pickup first, and then get on the horse. I was told later I was a source of amusement for my coworkers, but I was also told they appreciated my unwillingness to give up on a task I had zero experience in.

I became, in time, a reasonable horse rider. I still have a bum knee from a tractor repair gone very bad. I could tell of the time I almost drowned while horseback riding; or the time I helped a cow have her baby with one of my tools being a chain saw. But the main point is that it took time to become accepted.

At first there was the rumor that I was a heavy marijuana user. Eventually they learned otherwise. I did not take many of the steps you can to speed up the process of acceptance like attending a local church or marrying a local girl, although I tried my best on that last one. But eventually I became an accepted part of the community. After living in the area about 4 years I was even approached to run for sheriff by a local business man. The rumor was that the local sheriff was corrupt and bribed by local drug dealers. I was tempted, but did not feel that it was a good idea for me. I did not think I could beat the sheriff in an election. Ironically, if I had run, I might have won. The sheriff unexpectedly retired. A local junk dealer was elected sheriff. My life would be quite different today if I had run and won.

So if you are concerned with the troubling times ahead, the time to move is now, not later. Integrate yourself in the local community. Attend local events. Go to church. Volunteer. Buy a pickup truck. At some point you will become a local. No man is an island.

Update on Wednesday, June 8, 2011 at 6:01PM by [Positive Dennis]

Charles Smith was kind enough to give me the title to the essay that helped me clarify my thoughts in this area. It is "Art of Survival." 

The Great Toilet Shortage of 1973

My family has been in retail hardware for over 40 years, so I remember well the toilet shortage of 1973. Nixon had imposed wage and price controls because the inflation rate was an intolerable 4%, about what it is today. When you impose price controls you inevitably cause shortages. You cannot blame the manufacturers. If it costs you $1 to build a toilet seat, and you can only get $.95, then you stop your production line.

Of course there will be an illegal market. Or a partially illegal market where you buy a high margin product and get the toilet seats in the same order. This is illegal of course, but if you have hundreds of houses for which you cannot get occupancy certificates because you cannot get toilet seats, you do what you have to do. Henry Liu remembers it too: "the most bizarre example manifested itself in a shortage of toilet seats for new homes."

Often the powers that be want you to break the law. They want something to hold over you. This is what happened to Russian billionaire Mikhail Khodorkovsky.  Losing control of your serfs, even the wealthy ones, cannot be tolerated by Babylon the Great. So the advice I give to all us serfs is to obey, but keep a low profile.

Of course the lesson was learned from the toilet shortage of 1973. Wasn’t it?

MINSK, May 27 (Reuters) - Belarussian President Alexander Lukashenko said on Friday all price increases for consumer goods in the ex-Soviet republic must be agreed with the government, state news agency BelTA reported. 'Any price increases must be stopped,' Lukashenko told a government meeting, adding that only local governors and the prime minister could sanction price adjustments. Belarus devalued its rouble by 36 percent this week and Deputy Economy Minister Andrei Tur said on Friday consumer prices could rise by up to 39 percent this year. 

I guess not. There will be shortages in Belarus. The people knew something like this would happen and the shelves are already empty. I cannot see the US Government instituting price controls. But then again I did not foresee the 1.5 trillion dollar a year deficit either. It is not like Obama is instituting price controls over a large part of the economy.  Wait, hasn't Obama instituted price controls on insurance companies? Hasn't Obama proposed price control on Medicare payments to doctors far below the cost of providing that service?

I will blog soon about the great toilet paper shortage of 1973.

Chance Favors the Prepared Mind.

As Louis Pasteur said, "Chance favors the prepared mind." How can one prepare for the troubling times ahead? A big factor in being prepared is your debt load. A heard a sermonar many years ago that stuck with me. I call it a sermonar because it was half way between a sermon and a seminar. The speaker, Ron Dart, gave an interesting message on debt. He discussed a hypothetical 20 year old who buys a stereo for $2,000 on credit, but never in his life reduced his credit card balance below that $2000. So @ 15% interest that stereo cost the young man $300 a year for the next 40 years. That is $12,000. It is doubtful the stereo lasted that long. Was that a good choice for him? 

Ron gave another example about your car. Since you probably need a car to work, at least for most of us, it is an example of productive debt, in the short term. However, if you buy the car you want and not the car you need, you are going down the wrong path. Instead, buy the cheapest new car you can afford and finance over three years, not the five or more years they want you to borrow. Then instead of buying a new car after 3 years you keep the car for 6. This is the trick: Even when you have paid off the car, you continue to make the payment to your car savings account. Then when it is time to buy a new car, you pay cash. You continue to make the payments to yourself. You never need borrow again.

You see, the longer they extend the repayment, the cheaper the car seems. The whole sales experience is geared toward this fact. They want you to buy the largest car possible, as most people buy based on the payment. They will try to up-sale you at closing. "But the warrantee only costs $20 a month!" the salesman intones. Sounds cheap. But if you are financing for 60 months, that is $1,200! The salesman and the dealership make more money from these add-ons than from the vehicle itself. This is a typical sales technique of Babylon the Great.

Leaving Babylon is difficult. Not participating in the debt schemes of Babylon are a needed step. 

What Happens When Prophecy Fails?

Pam Dewey is continuing her series on the Camping mess and is focusing in on the chaos among his followers. As I mentioned in a previous post, we all have templates that we use to interpret the world. The Camping template has failed miserably and his followers have to deal with it.