Market Power

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

Thursday, February 03, 2005

More on the Lack of a Functioning Price System

Yesterday's Wall Street Journal had this article (paid subscription required) on the problems associated with trying to get medicines to those injured in the tsunami. Without a functioning price system, those with the drugs are forced to search for those who need the drugs and those who need to drugs are forced to wait...

About two weeks later, in consultation with Sri Lanka's Ministry of Health, the Adventist group moved half the drug shipment to provincial health officials. Two Canadian doctors working with the Adventists to assess medical needs in coastal refugee camps transferred 20 boxes of Primaxin to the deputy provincial director of health services for the Galle region.

The doctors took two boxes of drug on their rounds of the camps but didn't find anyone who needed it. "I've treated several people for everything from tooth abscesses to bronchitis," says Darlene Sandrich, one of the Canadian doctors. "I personally have not found any use for this drug." Some victims may have been transferred; some may have recovered and some may have died. Dr. Sandrich says pinpointing specific kinds of cases is harder than it seems. "There is still chaos, confusion," she says.

The phrase I highlighted is key to understanding why markets work well - we don't have to rely on third parties with limited information to make decisions. That's one of the things that those who have a particular distaste for market solutions for medical (and other) products and services often fail to understand - central planning and social engineering, while they may sound good, are extremely hard, and usually impossible, to implement effectively.