I’ve never wanted to restart a year so bad in my life. We lost Kobe Bryant, Trump almost started World War 3 with Iran, and now we’re living in a real-life version of Contagion that’s got us on a trajectory rivaling The Great Depression – and we’ve barely entered the second quarter. 2020 so far’s been absolute garbage. On the bright side: at least this pandemic’s waking people up to the fact that markets are garbage, too.
I know that many people reading this may already understand what a market is. However, watching a YouTube video of Sam Seder debating a Libertarian before writing this made me realize that I need to clarify the definition of a market before I demonstrate precisely why they’re trash. The all-mighty Google sources their meanings from the Oxford Dictionary’s website Lexico.com, which defines a market as “An area or arena in which commercial dealings are conducted.” For example, someone voluntarily calling into a radio show for free doesn’t constitute a commercial dealing since no money or commodities have been or will be exchanged. However, the host monetizing the call later does constitute a commercial dealing with the entity that distributes it, assuming that entity’s different. In other words, a market only exists when a commodity is directly exchanged – the most common commodity of exchange being money – for another commodity, regardless of what happens later. There are a lot of reasons markets suck, but right now, we’ll mainly focus on the contradictions of effective and notional demand and supply, as well as profit.
Lexico.com defines effective demand as “The level of demand that represents a real intention to purchase by people with the means to pay.” In contrast, notional demand is the demand of people who want to pay, but are unable to for some reason, e.g., not having enough money or due to something like a temporary ban. Effective supply is the amount of a commodity furnished on the market, as opposed to notional supply, which is the amount of a commodity merely wanted to be furnished on a market if there weren’t any market constraints, such as below-average profit margins for the said commodity or a ban. Another critical relation is derived demand, which Lexico.com defines as “A demand for a commodity, service, etc. which is a consequence of the demand for something else.” A good example is Nevada’s Governor, Stephen Sisolak, ordering a temporary closure of all non-essential businesses in the state to curb the spread of COVID-19. The order led to lower derived demand for public transportation since fewer people are traveling to work, drink at the bar, get a haircut, etc.
The COVID-19 outbreak itself is an excellent example of how effective demand and supply can lead to negative results. It’s widely believed that the COVID-19 pandemic started in November of 2019. Evidence suggests that it came from the consumption of bats or pangolins sold at the Huanan Seafood Wholesale Market – a live animal and seafood market that also sold wild animal meat, referred to as ye wei or bushmeat, of various exotic animals in Wuhan, China.
It’s worth noting that the other two major coronavirus outbreaks of the past decade, MERS and SARS – which COVID-19 is a variant of – are believed to have originated in bats as well. It’s also worth noting that no one’s found evidence of anyone selling bats or pangolins at the market. However, COVID-19’s genetic similarity to another coronavirus found in bats[1] suggests that it originated with them and was most likely transmitted to humans through an intermediate animal – widely believed to be pangolins.[2] Considering that 2/3 of the first 41 people hospitalized for COVID-19 had direct exposure to the market,[3] pangolins could’ve been sold there under the table since they’re a protected species. Assuming that was the case, then the effective demand for ye wei, which is known to have already caused two significant outbreaks this decade, met with the effective supply of ye wei. Markets can incentivize the supply of dangerous goods – like bombs, whos only use is murder – or infectious meat, leading to a global pandemic like we’re dealing with right now.
Another excellent example of the contradiction of effective demand is the effect of COVID-19 hitting my hometown, Las Vegas. Most people know that Vegas’s economy revolves around the strip, which mainly caters to tourists’ and locals’ leisure activities. The effective demand for goods and services was drastically lowered on the strip after stay-at-home orders were issued across the country to curb the spread of the virus, causing a domino effect. The lower effective demand – the lower income – for goods and services on the strip led to lower effective demand for labor on the strip, causing many workers employed on the strip to be laid-off. With their derived demand for healthcare coverage and housing coming from their employment, these workers being laid-off led, in economic terms, to them losing effective demand for healthcare coverage and shelter during a pandemic. I give kudos to Wynn Resorts for committing to pay all their employees through mid-May, even though it’s safe to say it may only be because it’d be too expensive and time-consuming to bring all their employees back if they lay them off. Still, I haven’t heard of any other companies committing to that. Thank god, also, that Governor Sisolak issued a moratorium on all evictions during the pandemic. Still, he did make it clear that any unpaid rents or mortgages would have to be paid back after, essentially postponing many Las Vegan’s homelessness to a later date.
The absurdity doesn’t end there, though. A resident at St. Vincent’s – Las Vegas’s men’s homeless shelter, which I coincidentally stayed in for about a month – was diagnosed with COVID-19. As a result, they shut the shelter down until further notice as a “safety precaution,” which means they wanted to avoid liability if all the residents got sick. Now they have as much as 500 residents sleeping outside in the parking lot of Cashman Center, sectioned off into “social distancing” boxes. This on the same street as thousands of empty hotel rooms, which are now only a notional supply due to the ban on non-essential business. Even if that weren’t the case, these homeless men would only have a notional demand for these rooms that could help curb the spread of the disease among them since they can’t afford them anyway. They’re essentially leaving these residents out to die, since a vaccine may not be available until at least early 2021 – a vaccine which they may only have notional demand for anyway.
Vaccines usually take 2 – 5 years to be market-ready, but the urgency of the pandemic has experts estimating it’ll take 12 – 18 months optimistically. The lengthy timespan is due partially to the complexity of the vaccine development process, as well as in large part to the need for funding. Over 60% of vaccine research and development funding comes from for-profit companies,[4] which was a major stumbling block in the development of SARS and MERS vaccines before. For-profit companies tend to be hesitant to invest in vaccine development since it’s much more lucrative to invest their funds in other medications. Even if they do invest, a pandemic may pass before they can get a vaccine to market, essentially wasting the money in their eyes. Publicly funded research would be subject to this same sort of prioritization, so the only way to guarantee that we develop vaccines promptly is to remove market forces entirely.
In a socialist society, there’d be no markets, because there’d be no money. Since production would be for use rather than for profit, vaccine research and development wouldn’t be dependent on securing investment; It’d only be dependent on having the necessary resources at hand. We wouldn’t stop developing a vaccine just because a pandemic passes; we’d continue to develop it, so we have a head start in case a future pandemic arises with a similar genetic makeup – like SARS and COVID-19. Since there’d be universal free access to all products, we’d have an incentive to stockpile a buffer of supplies so we can isolate for long periods to fight a pandemic if needed. Since healthcare would be free, anyone could get tested and use the vaccine or get ventilators as soon as possible. Our decisions would no longer be subject to the anarchy of the market because we’d finally have fully coordinated, cooperative control over production entirely.