One of the reasons why market solutions are superior to centrally planned solutions is that there tends to be a better match between supply and demand when provision is left to the market.
Scarcity or abundance, reflected through price change, is a far better and faster signal of shifts in demand and supply than any other method.
So witness this:
All of last year, rapid antigen testing (RAT) were banned. You couldn’t import RATs into New Zealand at all. Banned.
Read that bit slowly, and think about what might possibly be the legitimate reasons they could have been illegal in the first place… here’s the legal mechanics that did the prevention…
COVID-19 Public Health Response (Point-of-care Tests) Order 2021
https://www.customs.govt.nz/covid-19/businesses/point-of-care-test-kits/
The COVID-19 Public Health Response (Point-of-care Tests) Order 2021 came into force 22 April 2021. This order prohibits a person from importing, manufacturing, supplying, selling, packing, or using a point-of-care test for SARS-CoV-2 or COVID-19 unless the Director-General of Health has:
authorised the person’s activity; orexempted the point-of-care test from the prohibition.
This order replaces the Notice Under Section 37 of the Medicines Act 1981 (Gazette 2020-go1737) and broadens the group of Point-of-care Tests the restrictions apply to.
COVID-19 Public Health Response (Point-of-care Tests) Order 2021
The reason for the issuing of the Order is to prevent testing for COVID-19 using unverified or unaccredited methods or tools and prevent the misinterpretation of any results.
Then RATs became legal, in fact needed, because delta and then omicron were game-changing COVID-19 variants. Official accredited testing couldn’t keep pace with the virus’s spread.
But not just content to let the market handle the supply and distribution of tests, the government stepped in, probably in the name of equity. You can’t let the market and price determine who got a COVID-19 test, right?
So the government launched right on in there and “commandeered” the provision of RAT tests from the private sector: it called first dibs on all of the available tests coming into New Zealand, which at the time, were in high demand internationally.
Being scarce, the tests probably cost a bomb at the time. The government spent $1.1 BILLION dollars buying 183 million tests from the private sector. That’s $6.01, per test, cost to the government.
Now, six months down the track, just over 100 million of these expensive little puppies sit in warehouses around the country, no longer in demand. The retail price of a RAT test has sunk to $NZD4.00. Unless the government goes into the retail business, those 100 million tests are a sunk cost of $600 million.
Why? COVID is everywhere. And the population has gotten over it. And now, the demand for tests are low. What’s the point of getting tested when you know you’ve probably got COVID?
And out there, somewhere, are a group of pharmaceutical companies rubbing their hands together thanking the government for it’s largess on yours and my part.
Good one government. Central planning at its best.