The COVID-19 pandemic and the decline of conservative economics

  A recent review article in The Wall Street Journal revealed the black hole that conservative economic thought has fallen into since its peak in influence in the 1980s. The economists Casey B. Mulligan and Tomas J. Philipson of the University of Chicago, who worked in the Trump administration, both regarded the new crown epidemic as abandoning economics. The traditional view is that “government policies exist to correct market failures”.
  They reversed this view and believed that “government policies are more likely to fail than the market,” and the market rescues the people from the absurd decisions made by the government from time to time and corrects government policies. They argued that private companies “quickly controlled” the epidemic (thanks to Trump, of course), even though the virus is still raging. “It is necessary for the government to give way as soon as possible,” they wrote, which is also the purpose of “Trump’s ”
  speedy operation “.” The speedy operation is indeed successful, but it is a typical government intervention in the free market. Contrary to what Mulligan and Phillipson said, this action costing more than 10 billion US dollars is to correct market failures, that is, private companies lack the ability to develop and distribute vaccines due to concerns about costs and risks that cannot guarantee the return after successful development. power. The government intervenes in the market by investing capital in enterprises, ensuring the market, providing technical advice and coordinating.
  This intervention is essentially no different from requiring masks and blockades, which also solve market failures. Without government supervision, many individuals and companies will externalize the risk of infection due to failure to take adequate epidemic prevention measures.
  When the behavior of private subjects makes the social cost higher than the private cost, market failure will occur. Examples of this can be seen everywhere. When people are rational and not ethically constrained (as economists usually assume), they have ample motivation to dump waste into the river, drive at a speed that ignores the safety of pedestrians, cyclists, and other drivers, and feel at home. Go out in good conditions to spread infectious diseases to others. The only thing that can prevent market failure is the law. The idea that “government failure” is more common or worse than market failure does not make sense. Without government, there is only market failure.
  The government does make mistakes. But what other options do we have? Obviously, the only way to solve government failures is better government policies, not no government policies. Banning government participation in vaccine research would be catastrophic.
  Mulligan and Phillipson may also believe that the U.S. Food and Drug Administration (FDA) or the Centers for Disease Control and Prevention (CDC) should be removed, or advocate the abolition of the public health authorities’ large number of federal restrictions on shutting down businesses and compulsory wearing masks. And state laws. But it is these institutions and regulations that allow the government to solve public health problems, including various infectious diseases.
  The FDA’s emergency authorization is critical to overcoming doubts about vaccines, and CDC’s guidelines—albeit a bit puzzling—can assist local public health authorities in understanding their options. These government interventions are like rain from the sky for companies. They rely on government intervention to decide how to treat employees and customers. Contrary to what Mulligan and Phillipson said, companies do not solve these problems on their own.
  The argument that “government is bad and market is good” was popular in the 1980s. But in the 2008 financial crisis, it was hit hard. At that time, the “good” government led by the Federal Reserve rescued the financial market from the self-destructive deregulation promoted by free market advocates. Another blow comes from the epidemic. Various government projects and interventions requiring masks have alleviated the epidemic.
  Mulligan and Phillipson are both accomplished economists. What is puzzling is that they regard the most serious market failure in decades as an opportunity to demonstrate that the market will solve the government failure. Of course, it is difficult to rescue the free market economy from its recent moral and intellectual defeat, and it will only cause public confusion when the government sets out to deal with another wave of infections.