COVID-19 causes many problems. Two have popped up this week. Two very different sets of officials in two very different places are confronting two very different sets of problems. The Italian government has a specific COVID-19 problem: the price of face masks. The University of Wisconsin has a more general COVID-19 problem including the likelihood that both sources of revenue, student tuition and the state government, will not meet expectations.
The Italian government has created a problem for itself by replacing market signals with central planning. Alberto Mingardi at the WSJ tells it all in the headline: Italy’s COVID Price-Control Fiasco. As folks often say, to be fair, we should only report when government price controls are not a fiasco. Still you should read the whole thing just to remind yourself of the problems of central planning. Here is a tidbit:
Companies were allowed to import only masks that were already allocated to health-care institutions. No one was allowed to import masks and sell them to the highest bidder. Those who were buying up masks to hoard risked government confiscation. These moves clamped down on price gouging but created a shortage. Through a later adjustment, importers were able to keep 20% of their masks to sell on the market. Yet the signal was clear: importing face masks is better not left to “animal spirits.”
Central planning always leads to the need for more central planning. Later, Alberto lets us know that the market worked for hand sanitizer.
On this side of the Atlantic, the University of Wisconsin System (UWS) has created The Blueprint For The UWS Beyond COVID-19. UWS has two different meanings. Sometimes UWS means all 26 campuses. The Blueprint applies to all 26 campuses. UWS also means UWS central administration. They created the Blueprint. It is no surprise when they conclude:
To address the significant costs of the COVID-19 pandemic, the University of Wisconsin System must play a more direct role in operations at the campus level to more rapidly achieve systemwide efficiencies.
We are convinced that UWS works because each campus has a fair degree of autonomy. Perhaps you should read it all. It is only seven pages and it sounds plausible but it will meet with all the problems of central planning.
So we have two different sets of officials on two sides of the Atlantic dealing with COVID-19 and they both decide that they need more power to solve the problem. We know in Italy that the people being planned took “unexpected” actions. Expected the “unexpected” in Wisconsin too. Another action we can expect is for more officials to conclude that more central planning is the solution to COVID-19 problems. We really should expect the “unexpected” from both the planners and the planned.