Here’s another letter to Kevin Nowak:
Thanks for your response to my earlier note. I’m afraid, though, that I disagree with you that “this crisis shows markets can’t handle a crisis well…. We require active government involvement.”
I could write a long epistle to explain the details of why I disagree with you. But because you read my blog (thank you!), I’ll not do so here. Much of what I have to say is already said there.
I’ll content myself here to note this one pertinent and unfortunate instance of government involvement: the U.S. Department of Justice has created a “COVID-19 Hoarding and Price Gouging Task Force.” Because a central feature of well-working markets is the rising and falling of prices in response to changing conditions of scarcity, the creation of this Task Force testifies to the fact that markets would work as they should – prices for medical supplies and other now-more-demanded goods would rise as they should, and thus call forth greater supplies – but for an obstacle to their operation imposed by government.
In short, this “government involvement” obstructs the very market forces the alleged failure of which you say justifies government involvement. Your argument is akin to observing, at a construction site, a wrecking ball swing destructively each time a house begins to rise, and then concluding that no house will be built unless we turn over responsibility for building the house to the operator of the wrecking ball.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030