THE FREE MARKET: THE MEDICINE THAT SOUTH KOREA IS USING TO CONTAIN THE CORONAVIRUS COMPARED TO ITALY
During the past 60 days of this new year, the most trending topic that has been propagated to the masses of humans are the fatal ramifications of COVID-19 also known as the coronavirus. This has been the most popular and pervasive pandemic that has affected people globally whether its medically, mentally and/or financially. This is considering that on March 11th, 2020, the Dow Jones Industrial Average plummeted by 10% or 2,352.60 points in one day which made this the worst day for the Dow since 1987 amidst fears of the coronavirus. As of March 19th, 2020, there has been 242,205 cases of the coronavirus globally with 9,991 deaths. Not to mention, there are 145,500 active cases and 96,705 closed cases with deaths and cases increasing on the exponential basis. On the global scale, the optimistic view point is that 86,714 patients have recovered or been discharged from the virus and these statistics definitely vary by country.
The top countries that have been affected the most are China (the location of the supposed origin of the virus) with 80,928 cases, Italy with 41,035 cases, Iran with 18,407 cases, Spain with 17,963 cases and Germany with 15,320 cases. On March the 14th, South Korea was ranked fifth on the chart for top countries affected by the virus with over 8,000 cases but they did an effective job containing this virus compared to most of the countries globally. Geo-politically, Iran is in close proximity with China along with South Korea but it is rather ironic that Italy has the second highest amount of cases from the coronavirus pandemic compared to South Korea which is much closer to mainland China!
WHY IS THE LEGACY OF SOUTH KOREA EFFECTIVE IN CONTAINING COVID-19?
For the sake of this discourse, I am going to elucidate on the practical measures that South Korea implemented compared to Italy and I am going to explain the institutional structures of the countries that influenced the divergent health care systems of these respective countries. For example, to compare South Korea to Ghana which has just celebrated its annual Independence Day on March 6th, 2020, both countries had an income per capita was $200. Ghana had the upper advantage in economic advancement because of its abundance of resources like gold, cocoa, coffee, timer, bauxite, etc. In contrast, South Korea cannot environmentally compare to Ghana as it relates to natural resources but ironically as of 2017, South Korea’s GDP per capita income was $29,742.84 compared to Ghana’s GDP per capita income, which is $1,641.49. This is because of free market reforms that incentivized economic growth in South Korea for example, in 1961, General Park Chug-hee assumed the office of the Presidency after first ruling the country as the head of the military. For example under Chung-hee, South Korea was permitted to import goods, services and resources that the country was lacking which eventually lead to the country becoming a successful export country when it comes to textiles, garments and other products that were created by a labor force that didn’t need specialized skills to create which minimized unemployment in the country. Eventually, when education and training advanced, the production and export of iron, chemicals ship-building, electronics and other products lead to the economic advancement of the country.
The economic advancement of South Korea lead to rise of the country’s GDP, entrepreneurship, innovation and the minimization of poverty.
SOUTH KOREA’S HEALTH CARE SYSYEM AND THE FREE MARKET COMPONENT
First and foremost, in the midst of South Korea’s free market reforms in 1977, South Korea ironically introduced the National Health Insurance Act which covered all industrial employees in private corporations. Eventually, coverage also included government employees and in 1989, coverage expanded to not only employees but citizens who are self-employed or in the entrepreneurial sector. In the year 2000, the South Korean government monopolized all health care insurance societies into a single insurer called the National Health Insurance Program. Socialists and liberals may read this article and think that this is a victory for socialist healthcare but not so fast! In a socialist system, one of the paramount pre-requisites is the implementation of price controls by publicly owned institutions but for the sake of this discussion, publicly owned medical facilities monopolized by the Central Government eliminates the freedom of choice. On the contrary, South Korean patients could go to any doctor, hospital or clinic based on their preference. Also, 94% of the hospitals are privately owned and 70% of the secondary hospitals are also privately owned. The privately owned medical facilities set their own prices and this incentivizes competition which causes efficiency, price competitiveness and the expansion of quality services for the medical facilities. In addition, the amount of hospitals has increased from 1,185 in 2002 to 3,237 hospitals in 2020. In stating all of this, because of the abundance of hospitals and other medical facilities in South Korea due to the free market component of its universal healthcare system, this enabled the country to test 15,000 people on the daily basis, have four companies provide test kits to 118 facilities and set up drive-through centers for mouth and throat swabs with over 200,000 people tested since January the 3rd.
ITALY’S CENTRAL PLANNING AIDING THE EXPANSION OF COVID-19
On the contrary, Italy is a country where only 33% of the population between 25-34 years old have a University degree which is below the 44% of the OECD (Organisation for Economic Cooperation and Development) average. This leads to an unskilled and uneducated population who has a lower probability to ascend higher in the social stratification system which also limits the number of new professionals in the medical sector which is governmentally owned and operated. Also, the country ranks 111th out of 190 countries globally for enforcing contracts for independent contractors and entrepreneurs which disincentivizes legitimate business due to an insolvent rule of law which explains the problems of corruption in Italy. Also, Italy’s debt crisis has caused the country’s economy to stagnate due to its lack of economic reform which would incentivize productivity, entrepreneurship, innovation and economic growth. Ironically, the country has a lot of red tape and bureaucratic regulations with a weak rule of law for contracts which disincentives free market entry as an entrepreneur, independent contractor or innovator. When you have bureaucratic red tape in an economy with a weak of rule of law then you have a situation in which 12% of Italy’s economy is unaccounted for. Hence, the only hope for Italy’s potential for professionals, innovators and entrepreneurs to survive would be through the “Black market.”
ITALY’S SOCIALIZED HEALTH CARE SYSTEM WITH NO EFFECTIVE FREE MARKET COMPONENT
In addition to Italy’s weak rule of law, the country ironically has a healthcare system that is controlled by the government and private hospitals are mandated to provide its health care services free of charge to instead get subsidized by the country’s national health care service. According to the laws of economics, when government coerces one’s business to charge nothing for one’s services, it depreciates the service and value of the said product or service and in this case, I’m referring to health care. The Italian health care system is subsidized by the national health service or the Servizio Sanitario Nazionale (SSN) which is doing an incompetent job in serving the well-being of Italian citizens as a whole. Due to the institutional problem in Italy, 2,363 medicine graduates requested to work abroad instead of in the borders of Italy. Also, in contrast to South Korea with the rise of hospital openings, in Italy, hospitals inversely closed in over a decade. In 2000, there were 1,321 hospitals in Italy and in 2017, the amount of hospitals decreased to only 1,063 and the lack of hospitals and new healthcare professionals in the country, exacerbates to a larger challenge in containing the coronavirus. Italy, has over 21,000 cases of the coronavirus which makes it the second highest ranked country with cases of this virus outside of China!
In closing, the preparational tactics of South Korea compared to Italy could only exist if there were institutions put in place that would incentivize the containment of Covid-19. In this case, South Korea’s efficacy with the free market economy enabled its citizens to afford to compensate the private hospitals and clinics for their health care services. Also, the growth of these medical facilities added to the efficiency to test its citizens and to expeditiously treat and remedy the citizens who have been diagnosed with the coronavirus. In closing, the United States and the rest of the world would need to take note of South Korea’s continued progress in fixing the problem in the best ways possible and study the institutions which incentivize these kinds of preparational tactics.