The large number of rules lifted by federal, state and local governments in response to this pandemic reveals the sad reality that many regulations serve little to no good public purpose. Hopefully, people will realize how counterproductive these rules were and will not allow them to be reinstated after the crisis is over. In the end, we’ll all be freer and safer.
Since prices are not allowed to rise with rising short-run marginal costs, the shortage will continue. (In fact, it will continue even in the long term if the long-run industry curve shows diminishing returns to scale.) As by an invisible hand, the government will be pushed into doubling-down on authoritarianism. This reaction was illustrated by Trump’s bossing General Motors around and by Peter Navarro’s talking tough, which is easy when you have laws and decrees and armed men behind you. Navarro is Trump’s new “equipment czar”; the informal title says everything.
Roman Pancs argues eloquently that the current shutdown of the economy is de facto criminal . Here’s his conclusion:
The current government interference with freedoms of movement and contract is—for lack of a better term—criminal. If you want to interfere, interfere with zoning rules and build makeshift hospitals. Interfere with FDA approval guidelines, with patents on critical components for life support machines and face masks, and with employment restrictions imposed by professional associations. Motivate the industry to produce life support machines. Announce prizes for medical advances. Pay the nurses double. But do not gratuitously interfere with the freedoms that are the core values of the civilisation. Western democracies have already been exhibiting isolationist tendencies, and the recent travel bans run the risk of normalising nationalism.
But what scares me most is the layman who neither questions nor protests. And the economist who refuses to calculate.