Managing a Disaster, by Walter E. Williams

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Source: Official White House Photo by Joyce N. Boghosian

By Walter E. Williams, Townhall, Apr 01, 2020

Walter E. WilliamsI’m not sure whether COVID-19, first identified in Wuhan, China, in the U.S. qualifies as a true disaster. Putting the disease in perspective, we might look at current influenza illnesses. According to Centers for Disease Control estimates, between Oct. 1, 2019, and March 14, 2020, there have been 390,000 to 710,000 hospitalizations as a result of the flu, 38,000,000 to 54,000,000 flu illnesses and 23,000 to 59,000 flu deaths. That’s compared with, as of March 27, a total of 85,356 cases of COVID-19 resulting in the deaths of 1,246 people.

But let’s agree that COVID-19 is a disaster and ask what the appropriate steps are to deal with it. One of the first observations about any disaster is that the quantity demanded of many goods greatly exceeds the supply. There is a shortage. The natural market response when there is a shortage is for prices to rise. Rising prices produce several beneficial effects. They reduce the incentive for people to hoard while suppliers, motivated by the prospect of higher profits, are incentivized to produce more of the good in short supply. ….

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