It has been over 50 years since the Wizard of ID proclaimed the aphorism “he who has the gold makes the rules”. The obviousness of the statement could not be more visible than in today’s global marketplace scramble for scarce medical supplies needed to combat the current pandemic. The race to secure the required N95 masks and other Personal Protective Equipment (PPE) has turned into an all-out blood bath with the victor being the entity with the greatest purchasing power. Shady middlemen, counterfeit products and unethical business practices are playing out in today’s marketplace like never seen before. Deals made over international channels from one country to another are being intercepted while in transport and diverted to a higher bidder. Those with the monetary ability to do so are offering ridiculous amounts of money for product; often 500% or 1000% over the previous sale price of the commodity only a few short months ago. Countries are paying the premium to save the lives of their people at the expense of the lives of those who reside in countries without the purchasing power to compete in today’s market. Here at home in the United States we listen as the politicians tells us that States are competing against each other and against the Federal Government. The established health systems are also competing against the States for the same resources.
The world is in a war of a different kind, the likes of which have never truly been seen before at this scale. As of April 16th, 2020 the COVID 19 coronavirus has infected over 2 Million people in over 200 Countries, caused more than 139K fatalities, and there are over 528K people who have recovered including yours truly. There are also more than 1.4M active cases ( https://www.bing.com/covid). Unfortunately, due to shortages of tests, these statistics are certainly incorrect and in fact we may never know the true scale of this pandemic.
What is happening as a consequence of the outbreak that has caught my attention is what I’m calling World War P –the Purchasing Wars.
On a global scale countries are accusing other countries as the primary culprits in World War P. Germany has in fact publicly accused the US of modern day piracy and other countries have accused the US and others of bidding up products to a level in which they do not have the resources now to obtain. For sure it’s good time to live in American and some other wealthy parts of the world, and maybe not such a great time to live in many other areas. Is this fair though?
It would be easy to analogize this by comparing it to your instructions on an airplane where you are directed in the event of a loss of cabin pressure to first put your Oxygen mask on before helping others, including your child. The logic to this is that if you pass out from lack of Oxygen, your child or ward may also perish as a result of being unable to help themselves. Thus, if the United States cannot first help our people, we will not be able to help others as we have historically done. I can understand the merit in this argument.
In the current environment, the United States and others are competing with a plethora of potential buyers including shady middlemen, wealthy billionaires and other countries. There are rumors of buyers showing up at the factories in China carrying suitcases of cash and taking more than their fair share at the expense of every other potential customer. There are no global allocations for times like these and there is a limited amount of supplies on-hand, manufacturing capacity and raw materials available. The tactics being used are potentially going to have a domino effect that ripples down to the very first links in the supply chain which are often found in the poorer countries of the world. If China or any other country cannot get the raw materials from Africa or other producers because half of their population was killed by the virus, then nobody can produce the end-products needed for further combating the virus. The tactics being employed right now today may be short-sighted. Unless we come up with a global vaccine in short order, the damage to the global supply chain is going to catch us all as manufacturing relies on raw materials.
There are several ways in my opinion to resolve this disproportionate allocation of the finite supplies. The most obvious is to immediately increase global production. The current supply chains for these scarce medical items exist because they are the most efficient and least costly way to produce the product. These supply chains were developed over time as a result of global competition. However, there is the ability to establish other supply chains that can produce the products, albeit not quite as efficiently and cost effectively as the established supply chains. Creating these new supply chains will take precious time but the sooner we get started the sooner we can start producing.
The other issue is the allocation of the current finite supplies. It’s morally unacceptable to not provide resources to impoverished countries that will aide them in saving their population, much of whom the world depends upon for the production and mining of the raw materials that are utilized in the manufacturing process of personal protective equipment (PPE). I would propose that every fortunate country in the world with the means to do so assist these countries for the good of us all. Unfortunately, it’s almost certain that very few will step up to the plate in this time of crisis, hidden behind suspect bookkeeping that hides true values of GDP. The world has gotten too accustomed to the benevolence of the United States and it’s time for the world to step up and handle this crisis together else we will all face the consequences.
This pandemic has taught us all some very valuable lessons. Hopefully, the world should learn from this experience and create rules of engagement for future similar episodic events such as this in order to avoid another World War P.