The New Supply-Side Era: The O-Ring Meets Geopolitics

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In The New Supply-Side Era: The O-Ring Meets Geopolitics, authors Peter Orszag, Eric Van Nostrand, Noah Barbieri, and Layla McDermott argue that the dominance of single points of failure now operates at the scale of the world economy, requiring policymakers and business leaders to look beyond the narrow economic frame that traditional models capture.

This is not the supply side of the 1980s: the binding constraint is now the physical and network dependencies developed over a generation of globalization. Following UChicago economist Michael Kremer's O-ring logic, a single missing input can halt production far beyond it-which is why these shocks work through the economy slowly and unevenly, surfacing in prices months or years later. Policymakers, corporate leaders, and investors need to adapt their thinking to this new era.

Published in partnership with the London School of Economics and Political Science, you can read the full working paper here or read a summary article featured in the London School of Economics Business Review here.

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