Is Regulation Killing Our Coronavirus Response?

By / / Economics
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Economics professor Per Bylund makes the libertarian case for why regulation is making the Covid-19 crisis worse. He builds his case on two main examples: excessive restrictions on masks and the government’s monopoly on testing. While I agree there are multiple examples of bad laws and regulations that create unnecessary obstacles, deregulation is a partial answer, at best.
 
Here’s my 9-point rebuttal for why regulations aren’t the enemy – and what is.
 
1) The US still ranks among the easiest nations to do business in. Here’s one of many studies that shows us in the top 10 of easiest countries to do business in:
2) At the end of this crisis, we’ll have all the stats we need on whether more regulated economies responded better than less regulated ones.
now that we are experiencing a pan[dem]ic, what could possibly be the reason for restricting who can test whether you have contracted the virus? There are plenty of labs with competent personnel to conduct (and develop) – Per Bylund

3) Most independent labs do not have the resources, network, or expertise to aggregate global data on the virus & coordinate methods with multiple countries, without creating utter chaos. A hub and spoke model, with the CDC as the hub, should be far more efficient.

4) This is libertarian boilerplate: “entrepreneurs would compete to provide the best solution possible…”. This fails badly on three criteria: scale, uncertainty of return & long duration. American entrepreneurs are great at taking existing inventions or IP and commercializing it. Venture capitalists would never fund companies that might require billions for 10+ years of R&D with uncertain commercial returns. Government excels at that. I did a DEEP DIVE on it in the podcast: Would You Trust A Schizophrenic? (With Your Healthcare).

The CDC is the appointed monopolist–everybody else is restricted from conducting such tests. – Per Bylund

5) Public safety is a natural monopoly most entrepreneurs won’t touch. If they did, many who can’t afford public safety, wouldn’t get it. It’s why we need China to make essential generic drugs – they’re not profitable for domestic pharma companies. Yes, some can be (and is) done with government subsidies of private manufacturing.

we would benefit greatly from quick solutions, even if they are subpar (non-perfect). Such as repurposing industrial respiratory protection masks –Per Bylund

6) One (or even five) obvious, badly written, inflexible regulations that can be easily fixed or overridden is still anecdotal. Hardly enough to hold up a “Regulations make economies function poorly” argument.

7) Medical professionals – and everyone in crisis situations – is re-purposing/adapting whatever they have to make up for what they don’t. The bigger problem exposed by this crisis is short-sightedness. As with bank reserves or retail, private hospitals keep just-in-time inventories. This crisis makes the case for mandatory, communal or centralized stockpiles of emergency supplies – something that’s inconsistent with a profit motive that demands efficiency in high-probability scenarios.

8) Decentralization of testing or other emergency functions may be great for some things – and in theory, but it hurts response times in the same way democracy moves way slower than autocracy. Crises are wars. They demand decisiveness, coordination & execution not a bunch of soldiers doing improv.

9) Finally, culture decides the level and quality of regulation – and the systems and leaders we get. This applies to companies and nations, alike. (Listen to the clip below.) There are no deregulated nations. Maybe Malawi or Afghanistan. So whatever happens, our solution must include smarter regulation, greater adaptability, and better management. I know, it’s not very sexy or extreme, it’s just reality.

 
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