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A Tale of Two Diseases: Coronavirus and Over-regulation

Famed Chicago School economist Milton Friedman had many strong opinions over the course of his lifetime. Many of those shaped the way we look at the world and the way we look at the economy. However, Friedman also dedicated a good amount of his time to criticizing government health policy, particularly the Food and Drug Administration (FDA).

Of the bureaucratic agency, Friedman said, “The FDA has done enormous harm to the health of the American public by greatly increasing the costs of pharmaceutical research, thereby reducing the supply of new and effective drugs, and by delaying the approval of such drugs as survive the tortuous FDA process.”

Friedman’s harsh words towards the FDA can teach us more about how that agency - and other areas of government - damage the public health, especially in the midst of the panic over COVID-19, more commonly known as “coronavirus.” Government will get in the way of a potential solution far before it could ever bring one about.

Before coronavirus became a more widespread panic, Dr. Helen Chu - an infectious disease expert from Seattle - took various swabs from Seattle residents exhibiting flu-like symptoms. She recommended to government officials that they be tested for coronavirus. This was back in January.

The Center for Disease Control (CDC) told Chu she could not perform the tests unless she was approved by the FDA to do so. The FDA said she could not do so until her lab was approved as a clinical testing facility by the Centers for Medicare and Medicaid Services (CMS), a division of the Department of Health and Human Services (HHS).

To put that into perspective, almost two months before coronavirus became a bigger issue within the United States, four layers of bureaucracy were teaming up to prevent tests that would have improved disease detection and prevention. Now, here we sit later, dealing with the consequences.

The CDC also vastly limits innovation in creating best practices to stem the tide of this disease. In February, the agency mandated that testing could only be conducted using agency-approved tests. We later found out that the CDC’s test was quite thoroughly botched. However, it was too late, because the mandate put in place by the CDC had denied scientists and doctors across the country the opportunity to have developed a better one in the meantime. Now, we are behind the proverbial 8-ball because of government red tape.

Thankfully, the agencies finally relented on February 29th and allowed for wider biotech innovation to improve testing and detection. However, our government cost us months of valuable time on this front and made whatever effects this virus would have had (whether small or catastrophic) far worse.

This is not the only government roadblock to mitigating the impact of coronavirus. If you are reading this, you likely know someone who has panicked beyond reason about this virus. These people are not the ones who take necessary precautions, but the ones who are scrambling to hoard medical masks, who are buying out shelves worth of paper towels and toilet paper, and who are even predicting the end times.

To be clear, this is not an exhortation to dismiss coronavirus. It is very real and will come to you or a loved one if you don’t take basic precautions. This is an admonishment of over-reaction that threatens to deplete needed resources and exacerbate the issue.

Because of this panic, many stores are running out of food and supplies. One way this could be stemmed is by allowing markets to increase prices according to supply and demand. This would ensure that people would only buy what they actually need, instead of over-stocking and thus denying others the necessary access.

Put simply, price gouging is good in situations like these. However, many states have regulations that outlaw and vilify supposed price-gougers. This makes it easy for that one overzealous fool to buy an entire rack of supplies and go home while other people get more desperate, furthering the panic. It also decreases businesses’ incentive to produce. Businesses would have to put their production into overdrive and incur extra costs to get out a greater volume of products and yet are prevented from raising prices to satisfy this extra burden.

Lastly, certain environmental regulations are aiding the spread of the virus. Regulations targeted against plastic bags and cups force people to use reusable cups and bags. These cups and bags have more opportunity to pick up germs and spread them with each successive trip to a local Starbucks or grocery store. Localities should allow businesses to waive these regulations to make it easier to use disposable products to stem the spread of the virus.

While folks across the nation, in and out of medical laboratories, rush to fight and mitigate coronavirus, the government at all levels stands in the way. In this way, coronavirus has a key ally in infecting the American people, and it is the regulatory state. If our leaders want to get on the other side of this situation as quickly and efficiently as possible, they need to step aside, in whatever way possible.