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Government Failure on a Grand Scale

Summary:
Any person or organization can make mistakes, including governmental organizations and the state itself. And, as the popular saying goes, it’s easy to criticize. The problem, however, is that governmental mistakes have much worse consequences than any individual error. It appears that the US government, just like the Chinese government, totally botched the initial response to the coronavirus epidemic, albeit in different ways. It is now admitted that the repeated failure of the federal government to provide testing kits or (due to stifling regulations) let private laboratories manufacture them has played a major role in the skyrocketing of infections and deaths in America. Yesterday’s Wall Street Journal reports (“America Needed Coronavirus Tests. The Government

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Any person or organization can make mistakes, including governmental organizations and the state itself. And, as the popular saying goes, it’s easy to criticize. The problem, however, is that governmental mistakes have much worse consequences than any individual error. It appears that the US government, just like the Chinese government, totally botched the initial response to the coronavirus epidemic, albeit in different ways.

It is now admitted that the repeated failure of the federal government to provide testing kits or (due to stifling regulations) let private laboratories manufacture them has played a major role in the skyrocketing of infections and deaths in America. Yesterday’s Wall Street Journal reports (“America Needed Coronavirus Tests. The Government Failed,” March 19, 2010):

While the virus was quietly spreading within the U.S., the CDC had told state and local officials its “testing capacity is more than adequate to meet current testing demands,” according to a Feb. 26 agency email viewed by The Wall Street Journal, part of a cache of agency communications reviewed by the Journal that sheds light on the early response. …

CDC officials botched an initial test kit developed in an agency lab, retracting many tests. They resisted calls from state officials and medical providers to broaden testing, and health officials failed to coordinate with outside companies to ensure needed test-kit supplies, such as nasal swabs and chemical reagents, would be available, according to suppliers and health officials.

A Wall Street Journal story of a week ago already described the hairy disorganization and false promises of the federal response (“Trump Administration Confronts New Coronavirus Testing Woes,” March 13, 2020):

Administration officials including Vice President Mike Pence said millions of tests would be available, and Mr. Trump said last week that “anyone who wants a test can get a test.”

“Last week” was in early March. Fortunately, Americans, contrary to the Chinese, have a free press. The Journal reveals an interesting bit:

Some White House aides learned of complaints about the availability of testing from the media, not the public-health officials in their own government, an administration official familiar with the matter said.

In other words, we are witnessing a humongous “government failure,” as public-choice economists say. Most other national governments also failed but, as far as wide and timely testing is concerned, the US government may be the worst failure. Trump now sees himself as “a wartime president”—after failing to be a nasal-swab president.

Having tragically failed in what would seem to be relatively simple public-health measures that can be justified by a standard public-good argument (such as rapidly offering free testing to individuals who want it), American governments are now imposing or threatening to impose coercive measures. New York Mayor Bill de Blasio is thinking of quarantining residents in their homes. President Trump invoked the Korean-War-era Defense Production Act, which would allow him to force private companies to do what they would naturally do if their incentives were not stifled by current regulation or by future federal price controls. California Governor Gavin Newsom toyed with the idea of declaring martial law in California but is “not feeling at this moment that it is a necessity” (“‘Martial law’ Not Needed to Combat Coronavirus in California, Gov. Gavin Newsom Says,” Sacramento Bee, March 15, 2020).

His feelings changed slightly. As I am ready to schedule this post, a “Breaking News” from the Wall Street Journal says that Newsom just ordered Californians to say home except for essential activities. It is an open question whether or not, and under which conditions, a public-good argument justifies such an extreme measure. One general problem is whether, like in the case of 9/11, we will still be under some of today’s temporary measures in 20 years. What reasons do we have to trust the state in that regard?

Moreover, governments in America, like elsewhere in the world, have mandated or encouraged business closings that can’t last much longer without generating a recession and poverty worse than we have ever seen. Yesterday night’s editorial in the Wall Street Journal (“Rethinking the Coronavirus Shutdown,” March 19, 2020) contains some good ideas. One point is important to understand: if nothing (or much less) is produced, governments can issue all the checks they want, the federal government can add a trillion dollars or two to its current annual deficit of one trillion, and it will mainly produce inflation.

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