Restricted Tomes & Scrolls

The following is an economic analysis of the experience at National Library presented in Lee Kong Chian’s Shelves.

The use for price mechanism as a means of resource allocation have been well understood by economists and commoners (at least in the intuitive sense) and the old library reference section system, whereby people with the money would willingly bring more stuff to the library, deposit them into the lockers that came in 20-cents or 50-cents variations and then enter the sections they desire with only the authorized materials. Those who are not willing to spend the money would not bring unauthorized materials and stick to just few pieces of plain paper when they need to go into the reference sections. There’s a couple of advantage to this system – it places a little barrier (the cost of the locker) between using the locker and not using it, thus allowing for excess capacity most of the time unless there is high demand for the lockers. We can also argue that the capacity of the reference section is reached when all the lockers are used because the barrier means that only those willing and able to use the lockers and yet with unauthorized items are admitted into the section. Those who don’t want to pay are kept out while those who didn’t bring unauthorized materials are welcomed since they pose no trouble to the library and the fact that they are compromising with the rules shows that they genuinely wants to make proper use of the library.

Removing the paid locker system is a major blow to this properly laid down resource allocation mechanism. People who are going to central lending but don’t want to carry their bags around can utilize excess capacity when demand has not peaked, without incurring any cost. Others who don’t want to pay and willing to leave their stuff at home now have the incentive to bring their stuff and use the lockers since they are free, unleashing excess demand that would otherwise not have existed. In both cases, there is free-ridership because of the cost-free lockers. Increasingly often, people who are willing and able to pay and thus urgently need to use the reference library is now unable to do it because they are carrying unauthorized materials. In the past, such case would be much rarer because the barrier strips the system of excess demand and allocates resources properly, allowing the full capacity to be utilized only under very high demand conditions. The removal of the price mechanism from the picture creates great inconvenience and the cost we save from the lockers now translate to additional trips made to the lockers after discovering more and more items are actually unauthorized – in the past, the security guards understand that there’s a cost incurred for the lockers and thus would be helpful in picking out unauthorized stuff from you before you use the lockers (now they only do that after you locked up everything and go to the checkpoint).

The result of the policy? A over-utilization of the lockers and under-utilization of the reference library. Lockers are over utilized by free-riders who are not genuinely using the reference library or would otherwise have not need to use the lockers and the reference library is under-utilized because most locker users are not sincere about using the reference library and some don’t use it at all. Those who truly want to use it but arrived late (peak capacity of lockers utilized) are barred from using the reference library. Removing the price mechanism has removed an assessment of how much individuals need to use the reference library and made lives much more difficult for security guards who have to argue with library-goers who are unable to find available lockers. The strict rules governing the items authorized in the reference library is actually not the issue, although it is fully responsible for the need to ration locker spaces using the price mechanism. However, once the market is created, resource allocation have to be optimal and given the existing system, it is not.

The greatest joke about this issue is that there’s no market failure. We are able to extort a fee from people using the lockers and thus it need not be provided as a public good. Since when the price mechanism is utilized, there’s no [obvious] external cost & benefits, there’s no externalities to speak of. In other words, the inefficient resource allocation is purely a result of stubborn, uneconomic people implementing rather brainless policies. A thing to note is that the cost of the lockers is not dynamic but fixed and thus there’s no supply=demand kind of graph to sketch. People can always argue that 20-cents and 50-cents are too low for anyone to respond drastically and that we should be glad we are not charged the money because even with the fee, the scenario would still be the same and we are back to square one. That’s not true. Even if the eventual situation one is faced with, one can be sure that a lot of the locker users are much more genuine users (assuming there’s a continuum of false researcher to genuine ones) than for the case without the price mechanism in place.

I am no neoclassical economist. While I advocate the use of the market-style resource allocation method, I don’t think that the result of the system would be close to Parento Optimal equilibrium because of limitations such as unwilling people who doesn’t know they need to pay for the lockers before they had gone to the library. Imperfections exist but still, it beats the senseless, information-less system that is created when the price mechanism is removed.

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