It’s an election year, and Americans are debating big issues: capitalism and socialism, the role of government, the future of health care. These issues reflect what some see as a conflict between individual well-being and the greater public good. Do we want an up-by-your-bootstraps society where people mostly look after their own, or do we want a strong safety net for those who fall on hard times?
Now the coronavirus is upon us. In its shadow, the line between individual well-being and the public good is harder to see.
In fact, the public good is not served by free markets but by what economists call “complete markets” — those that reflect the true social cost of how we use resources.
Consider this: a friend recently went to the drugstore to buy hand sanitizer. But the shelves were empty, and the clerk said, “The guy before you bought 20 bottles and cleaned us out.” No doubt the hoarder thought he was protecting himself and his family. But in fact, he’d be safer if more people in the community could clean their hands. Hand sanitizer is now a public good.
This plays out at a larger societal level, too. Unlike most developed nations, the U.S. lacks a safety net of subsidized health care and paid leave. That means uninsured, low-wage workers have little choice but to work when they are sick. Many of those workers serve the public in a hands-on way — toiling in fast-food restaurants, caring for the disabled and elderly.
You may not agree that “health care is a human right,” but it should now be more obvious that everyone is safer if the sick can get treatment and stay home when ill. In other words, we protect ourselves by protecting others.
A robust public health system is also a public good. But in 2018, the Trump administration cut funding for efforts to identify and contain emerging health threats abroad — including in China, where the coronavirus originated.
This may reflect a desire to put “America First” and push back on free riders who benefit from our investments without ponying up. But here, too, undermining the greater public good could hurt us.
The coronavirus also sheds new light on the role of government and the free market. In our increasingly globalized, laissez-faire economy, corporations understandably make decisions that boost their bottom lines. With globe-spanning supply chains and “just-in-time” inventory, corporations save money on parts and labor while avoiding sunk costs.
In a crisis, those supply chains can snap and inventories can be quickly depleted. For a corporation, the effects can be minor and temporary — headaches and lost profits. But the cumulative costs to society could be much greater and longer-lasting, including life-threatening shortages of medicine and food, economic disruption and civil unrest.
In fact, the public good is not served by free markets but by what economists call “complete markets” — those that reflect the true social cost of how we use resources. Governments should incentivize businesses to bring their private interests in closer alignment with the public good and ensure we maintain emergency stockpiles of essential resources, even if it costs money in non-crisis times.
Whether our political instincts are liberal or conservative, the coronavirus crisis should remind us that in many cases we help ourselves by helping others.