30 May 2019

How better price mechanisms could save lives on Everest


As is all too clear from grim recent newspaper reports, climbers are dying on Mount Everest, some of them because they are being forced to wait in line in the most perilous conditions.

Eliminating those queues must therefore be of the highest priority if we want to see fewer people perish unnecessarily. What’s needed is  another method of dealing with congestion and managing access to scarce resources. The most obvious, most effective, one is to charge for that access – simply put, the best form of rationing is by price.

The people climbing Everest aren’t poor, obviously enough. Competing companies offering to guide people up – and sometimes not down – has meant the cost has fallen substantially in recent years. That’s why we see those images of congestion on the mountain and reports of people losing their lives.

The solution is simple enough: charge people more for climbing Everest and the congestion will ease. The money should go to the Nepalese authorities, and there’s nowt wrong with a voluntary transfer from richer people to a poor country.

In fact, in economic terms that mountain is a natural resource, one which produces rents. We’ll have neither less nor more of it dependent upon price. The British economist David Ricardo told us what to do here centuries ago, and he was later backed up by the American, Henry George.

Simply put – tax the heck out of it. We’ve got to gain the revenue to pay for government from somewhere, it might as well be where where supply is not effected and taxation deals with another problem at the same time, in this case dangerous mountainside congestion.

This is also the argument in favour of the London Congestion Charge. Yes, a policy brought in by ‘Red’ Ken Livingstone, but one originally designed by Sir Alan Walters, St Maggie’s favourite economist and promoted over the years by the likes of us at the Adam Smith Institute and other such rabid right wingers.

In London’s case a scarce resource, road space and time, was being overused as there’s no marginal price to it. Imposing one in the form of a charge meant easing congestion while usefully raising a bit of cash – a good example of how effective rationing by price can be.

We could go further too, offending even that modern religion, the National Health Service. Many more people desire to see a GP on any one day than possibly can, some number of whom don’t in fact need to see one. In terms of ensuring efficiency, it therefore makes sense to ration access by price.

Obviously, the seriously ill can have a break – we could say, for instance, that only the first eight appointments in any year must be paid for.

In fact it would be rather like the prescription system we have at the moment. The charges Brits pay for medicine aren’t there to pay for anything in particular and there’s a maximum you can possibly pay in a year – you can buy a 12 month season ticket for £110 or so. Those fees are there to limit access to the system, to ration healthcare by price and dissuade the timewasters (though it would be a brave politician who talked in those terms).

While that does indeed shock the national church it is how the Nordics do it, with a taxpayer-funded system plus small up-front fees to see a doctor – and doesn’t Polly Toynbee continually shriek that we must be more like Sweden?

Now, it might seem a logical leap to go from queues on Everest to the NHS, but economic principles transcend all sorts of areas of human activity. In this case, if a resource suffers from excess demand, we must ration access to it. Rationing by price is the best way to do this, the most efficient and the most logical.

It is also the best way to keep people alive. That’s as true of people keeling over in an NHS queue as it is of those strolling through the Death Zone at 8,000 metres above sea level. The logical solution to the one is the same in essence as that to the other. Charge people and, if necessary, charge them some more.

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Tim Worstall works for the Continental Telegraph and the Adam Smith Institute.