With almost a thousand people diagnosed with coronavirus and news of Israel’s first fatality it has become clear that contracting the virus is to be strongly avoided. For the elderly, COVID-19 is especially dangerous, but even for young people a positive coronavirus diagnosis is equivalent to receiving a lengthy house arrest sentence. Even merely having been in close proximity to somebody who has the coronavirus can lead to the imposition of two weeks of strict quarantine. Unsurprisingly, more and more individuals are either unwilling or unable to go outside. As a result many have become reliant on delivery services to provide them with food and other supplies.
It is clear that existing delivery companies are struggling to meet the surge in demand for delivery. Responding to the increased demand for delivery services are delivery men (and women). Delivery men risk becoming infected while delivering packages to those who are either unable or unwilling to take the risk of going outside. As such in the Chinese city of Wuhan, where the coronavirus pandemic originated, delivery men were hailed as heroes. However selfless existing delivery drivers are, some number of them are sure to stop delivering as their family and friends beg them to quit their increasingly dangerous jobs. So the question arises: How will food and supplies get delivered in the midst of the coronavirus pandemic?
Thankfully the situation we find ourselves in with regards to delivery services is not unprecedented. In fact for many years there has existed a type of product which ordinary consumers refuse to go out and get for themselves because of the extraordinary risks involved in the procurement of the product. To be specific I am talking about what is called in layman’s terms drugs or to be technical, illegal substances. By examining how the market for illegal substances is able to function we can understand why those trapped in their houses because of coronavirus are not going to starve death.
Given the dangerous nature of dealing drugs it is surprising to learn that illegal substances are available for sale at all. Being a drug dealer sounds like a terrible job. You have to worry about being robbed, injured or killed by your business competition. Drug dealers also have to worry about being arrested and getting locked up. Let’s not even mention the risks associated with dealing with a clientele that actively uses illegal substances.
Yet in Israel, even after police took down the Telegrass network, it is only slightly more complicated to buy drugs than it is to order a pizza. The reason why people are willing to sell drugs, despite the risks associated with doing so, is that selling drugs is a highly lucrative activity. A 2016 Business Insider article explains that the same kilogram of cocaine bought by a cartel for less than a thousand dollars in Columbia could have a street price of upwards of $150,000 in America. The huge disparity in the price of cocaine is the result of the drug’s price increasing significantly at every step in the illegal drug distribution chain; be it on the consumer, dealer or wholesale level. Ordinary logistics costs, such as the fuel required for transportation or maintaining a distribution network, play a factor in the difference between the prices consumers, dealers, and wholesalers pay for illegal substances. However, what explains the massive differences in the price of drugs is that being engaged in the sale and distribution of illegal substances is extremely dangerous and risky.
To understand why selling illegal substances is so lucrative one merely has to examine how it is that the price of an illegal drug is able to increase so dramatically at every stage of the distribution chain. Casual drug users would prefer to pay for their drugs the same prices wholesalers or even dealers pay. However, your average pothead is not willing to face being robbed at gunpoint or sent to prison for the rest of their lives in order to save a couple of bucks. Casual users are willing to pay a premium in order to avoid being exposed to the violence and risks associated with being deeply engaged in the drug trade. Drug dealers, individuals willing to take the risk of being arrested or shot, are thus able to charge consumers significantly higher prices for drugs than what they had to pay their suppliers. Similarly, small-time drug dealers are willing to pay their suppliers a premium in order to stay under the radar and avoid becoming the target of a federal task force. By tracking the ever increasing price of illegal substances it becomes clear that drug dealing is lucrative because being engaged in the trafficking of illegal substances is risky and dangerous.
While there do exist some individuals who engage in the sale of illegal substances from the goodness of their hearts, the vast majority of drug dealers are in it for the money. Without the ability to make boatloads of cash most drug dealers wouldn’t bother putting their lives and freedom in danger. It is specifically the high profits to be made dealing drugs which encourages people to become drug dealers and provide casual users with easy access to drugs.
Having learned about the drug trade we are able to return to the question of how it will be possible for food and supplies to be delivered in light of the increased demand for delivery and the increased danger associated with being a delivery man caused by the coronavirus. We know that markets, even those for illegal goods, contain mechanisms for increasing the quantity of a product available in the face of an increased willingness to pay for the good in question. As such I am confident that those confined in their houses are not going to starve. Instead, like consumers of illegal substances, residents of areas struck by the coronavirus are going to start to better compensate delivery drivers and other individuals willing to undergo the risk of contracting the coronavirus. Existing delivery drivers are going to see their wages increase and individuals who wouldn’t have previously considered a job delivering pizza are going to reconsider in light of the big bucks to be made.
Markets allow individuals to shift risk from themselves onto others, with the consent of both parties. When allowed to function, markets utilize prices not only to let stoners get high but also to transport much needed supplies in the midst of an international pandemic.