Covid-19: What Should the Government Do?

The Covid-19 pandemic is caused by the virus SARS-CoV-2. It’s highly contagious with an R0 around 2 — an infected person passes the virus on to two others on average. Exponential growths always end up in large numbers pretty rapidly, contrary to our basic intuition. They are explosive, like in uncontrolled nuclear reactions. Once a few people in a population get the virus, nearly everyone gets it without proper containment.

Communicable diseases can be controlled and stopped, as has been demonstrated by the eradication of smallpox viruses (certified in 1980.) Smallpox eradication was mainly done by governmental and multinational health organizations. It could not have been otherwise since the non-governmental sectors (markets and civil society) were not up to the task. Continue reading “Covid-19: What Should the Government Do?”

Goods, Property and Externalities

Basic economics partitions goods into private goods and public goods, and property into private property and public property. Private goods are defined as those goods that are rival — one person’s consumption of the good  reduces the amount available for others to consume — and excludable — a person can be prevented from consuming the good. Thus a cookie is a private good. A cookie eaten reduces the stock of cookies, and cookies can be locked up.

In contrast to private goods, public goods are non-rival and non-excludable. The services of a lighthouse is an example of a public good because one person’s use of the lighthouse signal does not affect the use of the signal by others, and people cannot be prevented from seeing the lighthouse signal. Continue reading “Goods, Property and Externalities”