Market Power

Musings by an academic economist on the power of markets and the power over markets.

Thursday, February 03, 2005

Lack of a Functioning Price System

The Wall Street Journal describes how disaster relief folks in Sri Lanka (paid subscription required) are dealing with useless items sent to them in aid packages.

The recent outpouring of tsunami support has brought with it a mountain of unusable stuff from the Western world. That includes cozy winter hats, Arctic-weather tents, cologne and thong underwear. Dubbed "frustrated cargo" by aid workers -- because it often has nowhere to go -- these misfit items are gathering dust in warehouses and creating major headaches for relief workers in the field.

Mounds of donated clothes litter the coastal highway south of Colombo. Bottled water from European mountain streams is flowing freely, raising concern about empties littering the jungle. Medicines that are no longer needed, such as morphine, are feared to be loose in the country.

Some people are putting items of no apparent local value to creative use. Impakt Aid, a Sri Lankan group, cites two dozen goose-down jackets it recently received from a European relief agency. The group forwarded the coats to a refugee camp. There, they were used to wrap babies without diapers.

Many vital needs still aren't being met, even as marginal donations pile up. Government figures record the arrival of 30,000 sheets, but only 100 mattresses. Colombo's main airport says it received 5,000 pajama tops from Qantas Airways, but no bottoms to go with them. The airline won't comment beyond saying that it sent a planeload of supplies to Sri Lanka, primarily medical supplies. Many of the country's more than 300 refugee camps face critical shortages of cough syrup and infection-fighting creams -- even though there are plenty of skimpy undergarments.
and this:

Unwanted medicines pose a more serious problem. Wary of potential epidemics, some doctors and private citizens appear to have unloaded their sample bins and medicine cabinets and shipped whatever they could find. The shipments have included useful antibiotics. But they also included drugs that aren't common in many villages and can easily be abused, such as Valium and antidepressants.

A lot of stuff that nobody wants gets shipped out and eventually gets tossed out. Aid workers have to think of creative ways to use some of the things (thinking that, as with all things, could be put to other uses). Black markets for the Valium and antidepressants are probably working rather well right now. The article presents an interesting look at the sorts of things that happen when there is no operating price system.