Not everyone liked “Mark Carney Was Wrong.”

In that linked article, I suggested the so-called “middle powers” of the world should figuratively bite the bullet and pay into one of the protection rackets run by the US, China and Russia. It’s either that, I warned, or risk biting the bullet literally in a world of great power competition.

Donald Trump, Vladimir Putin and Xi Jinping are playing a high-stakes game of poker, and the buy-in’s too rich for middle powers individually. Carney in January argued those “powers” should pool resources for a seat at the table.

That sounds good in theory, particularly when you pitch it as Carney did: An alliance of middle powers dedicated to post-War, neoliberal norms would give democracy a fighting chance in a world increasingly inclined to autocracy. (Never mind that some key middle powers aren’t really democracies, something Canada knows all too well thanks to a severe diplomatic rift with Narendra Modi’s India.)

The problem is that, as I put it last week, the middle powers as a group don’t have a lot in common. “The only trait they share across the board is a lack of leverage in a world of great power competition,” I wrote.

My overarching aim wasn’t to advance a fatalistic view of the world. Rather, the piece was actually a comment on scarcity more than it was geopolitics. Here’s the key passage:

Resource scarcity’s only going to worsen. Energy, food, water, semiconductors and on down the list, will become ever more dear. Acute scarcity’s synonymous with an existential strategic imperative: Commandeer the resources themselves and where that’s not possible, exercise control over extraction, production and supply routes. That’s exactly what the US, China and Russia are going to do.

When you don’t share a government, let alone a currency or a fiscal framework, and when you lack a formal military alliance, it’ll be well nigh impossible to respond to such efforts on the part of the major powers.

Consider Europe. Despite a common currency (the euro’s not universal, of course, but it’s ubiquitous) and a governmental suprastructure in Brussels, true integration remains a pipe dream. Even within the currency union, coordination’s hampered by wildly disparate fiscal circumstances across member states.

Yes, Europe showed some unity when Trump threatened to annex Greenland, but no, there wouldn’t be anything Europe (or Greenland or Canada) could do in the exceedingly unlikely event a future US Congress was fully behind a president hell-bent on commandeering the territory.

The threat to Greenland — and to Carney’s Canada for that matter — is emblematic of the extent to which any place with significant resources will be coveted by the major powers, even in scenarios when seizing territory isn’t necessary to obtain the resources. Because if you’re a major power and you don’t lay claim, one of your two competitors might, at which point you’ll have to fight or relinquish. Russia relinquished in Venezuela. Would the US do the same in Taiwan?

With all of that in mind — and with a hat tip to BMO’s Ian Lyngen — consider the figure below.

That’s a news-based indicator of shortages as complied by Dario Caldara and Matteo Iacoviello of GPR fame. As you can see, the high point from the Iran war was above any reading registered outside of the pandemic, the 1970s inflation and the two world wars.

If you’re curious about the construction of the gauge, you can read all about it in an explainer found on the Fed’s home page. Long story short, it’s like other news-based indicators. It uses textual analysis to parse US newspaper coverage for the relevant topic. The sample size is pretty large: 25 million articles across half a dozen major US papers.

As Caldara and Iacoviello write, “the textbook definition of shortages is the inability of supply to meet demand at prevailing prices [but] media, market participants and the public often view shortages through a broader lens.”

Their index is designed to assess “the prevalence of shortages in that broad sense, over history.” (Emphasis mine.) The methodology employs four categories of shortages, each of which has its own time series: Food, industrial products, labor and energy. The figure below plots the latter two.

The labor measure was the highest ever in the wake of the pandemic, and as Lyngen remarked, “the energy-specific component [rose] to 106 [in March] the highest level since 1979.” The increase on that metric from February to March was the most pronounced since Russia invaded Ukraine.

If you’re curious, the industrial products gauge is also elevated relative to the post-War period. Caldara and Iacoviello said recent advances on that index are mostly attributable to “conflict-related shortages,” but in the very same breath noted the gauge is starting to pick up “shortages of AI-related computer chips.”

My guess is that semi shortages will keep the industrial products index elevated relative to history, particularly given all the news coverage chip bottlenecks are receiving in 2026.

The figure below shows you the decade-by-decade average for the main (i.e., overall) shortage index.

As you can see, the 2020s are on track to record the second-highest average on the shortages index in data back to 1900, behind only the 1940s.

My contention continues to be that such conditions are conducive to a “might makes right” geopolitical environment in which middle powers can’t compete for scarce resources or are simply robbed for the ones they have.

If you’re going to be extorted anyway — and the middle powers most assuredly are — you might as well be a willing participant. At least then you’ll have a say in the terms. Not the final say. That’ll go to the major power extorting you. But if you play ball, your concerns will be taken into account and maybe even accommodated to the extent possible. Venezuela’s a laboratory for that model. We’ll see how it goes.

Speaking of models, Caldara and Iacoviello did some econometrics with their indexes. As they detail in their paper, a rise in the shortage gauge “of the magnitude seen since the eve of the [Iran] conflict has historically been associated with a reduction in world GDP of 0.8% and an increase in world headline prices of 1% after about three years.”

So, slower growth and higher prices. There’s a name for that conjuncture.