Waiting for Masks

-What are we doing right now?

Waiting for masks.

-That’s true.

(Silence)

Many citizens are waiting endlessly for masks. After waiting so long, people are now on the verge of forgetting what they were even doing in the first place. We are told that more than 10 million masks are produced every day, yet no matter how hard we look, we cannot find them. Where, exactly, did all those masks go?

The problem begins, first of all, with a surge in demand. Even most people who normally never wore masks are now using disposable masks every day. Naturally, market output cannot keep up with that level of demand, and prices are bound to rise vertically. But such a steep price increase is merely a signal that disequilibrium has emerged in the market. If left alone, many other suppliers will inevitably enter. Then mask prices will fall toward an equilibrium point, and at some point they may even drop below their previous level.

Without a doubt, if only given time, the market would solve this problem perfectly. That is because the market is precisely the space in which such problems are resolved. But the government tried to solve the problem in the opposite way. Its solution was to adopt a weekday rationing system. Of course, beyond price, the government also has to address many other issues, such as public sentiment and political demands. But fundamentally, when masks themselves are in short supply, it is doubtful that a weekday rationing system can solve the problem.

When someone comes to me for help solving a problem, if I worry only about that person’s feelings and offer comfort instead of saying what is necessary to solve the problem, can that person truly be satisfied? In the same way, when altruism intrudes into the market—a space governed by each participant’s self-interest in the pursuit of solutions—the market falls into confusion. The real harm of altruism is that it makes the supply and demand of market participants incalculable. The government’s good intention to distribute masks fairly to everyone is in reality highly likely to create even more confusion.

This can be clearly seen in the case of E-Dent, which announced a halt in production after the government imposed price controls. E-Dent was a company that produced dental masks. When masks for the public immediately became scarce, the government also required the company to supply medical masks. The problem was that while demanding a tenfold increase in output, the government said it would recognize only 50% of the cost. As a result of the government trying to force a solution onto the market, the supply of dental masks was also disrupted, and now even dental clinics are left waiting for masks. Masks that had existed in the market disappeared as well.

Price itself contains vast amounts of information, and producers and consumers communicate through that information. Price is like light: just as light becomes a seven-colored rainbow when passed through a prism, when it passes through the eyes of a producer, various kinds of information appear within it. But when the government artificially controls prices, producers can no longer read consumers’ needs. Price control produces a kind of sunglasses effect. Then, just as the whole world looks dark through sunglasses, producers can perceive consumers’ needs only partially. As such price control grows more severe, it becomes like light being unable to pass fully through dark lenses: producers end up unable to know anything at all about consumers. Then, as if they can no longer see ahead, prices disappear, and the market disappears as well.

Price is the universal language used by all who participate in the market. All information is exchanged through that language. Controlling price is exactly the same as blocking the language through which producers and consumers communicate. Then people must try to communicate by other, non-standardized means. As a result, they give each other incorrect information and make incorrect judgments. In the end, communication breaks down. The consequence is that while one side is in an uproar over a mask shortage, mask producers stop producing masks. This is something that would not have happened if prices had been left alone to send accurate signals to everyone.

If price controls continue like this, there is no way around eventually regulating people’s demand. Disposable masks become two-use masks, then one-day masks, then one-week masks. That is unavoidable. Once you begin controlling the market by force, you must maintain balance by force as well. In every case, that ultimately appears as oppression of people. For now, the government may ask people to endure the temporary five-day mask rationing system, but if supply becomes even more insufficient, there is no reason it could not impose a 30-day rationing system.

The decision to ration masks now is a political judgment aimed at calming public discontent. In the process, mask producers and distributors who have done nothing wrong are vilified. That may temporarily suppress dissatisfaction politically, but in the long run public anger can only grow even larger because of the mask shortage. Something that was taken for granted until just recently is no longer taken for granted now.

There is an even bigger problem. Masks are not the only thing in short supply. We are increasingly going to face shortages of thermometers, medicines, medical services, emergency food supplies, and other goods related to COVID. If, just as with the five-day mask rationing system, other resources are also rationed, ordinary people’s lives will fall into great confusion. If the market is controlled in order to dismiss a small disorder, only a greater disorder will be added. Then a greater political crisis will follow.

The government should persuade the people on the basis of the trust it has built up so far. It should trust the people and take its hands off controls over price and demand so that the market can smoothly supply scarce goods. Only then can both the people and the government survive. If the supply of masks is left entirely to the market, over time people will gradually forget that they were ever waiting for masks at all. In the past, whenever we went to the pharmacy, masks were always there waiting for us. Now we are the ones waiting for masks. Worse, we are reaching the point of forgetting what it was we were waiting for in the first place.

That is what rationing is: a brutal kind of waiting. There is no word of whether it is coming or going. Even if there were, you could not trust it. If rationing continues, we must grow accustomed to waiting itself. Without the market, there is no other way. The problem is that life is short—too short to spend waiting for all those other things.

Price is like language, so controlling price is like preventing people from saying what they want to say. When people cannot say what they need to say, they develop hwabyeong. A person suffering from hwabyeong accumulates deep resentment from being unable to speak. If that resentment keeps building, one may not know what that person might do, because it could even become fatal. E-Dent, which abruptly declared a halt to production under price controls, can be seen as a case of just such hwabyeong.

Every government says it serves the people. Then it must remember this: if the state is the people, the market is also the people. The market is the people. Just as the government must do its utmost to protect the people, it must also do its utmost to protect the market. That protection means giving freedom to the market, just as the people themselves are meant to be free. Just as the people must not be forcibly controlled, the market too must be treated in the same way.

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Original title: 마스크를 기다리며

Author: Gyeong-mo Son

Date: 2020-03-09

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=15&idx=22459