Economic Miscalculation and the Covid-19 Pandemic

Recovery bright Room with comfortable bed and medical equipment n hospital. 3d rendering.

As Covid-19 began to spread through the United States in February, many feared hospitals would become overwhelmed with infected patients. To meet the demands a global pandemic places on our healthcare system, the U.S. Army Corps of Engineers began hiring private contractors to build field hospitals to treat patients when hospitals hit capacity.

The Corps effort was an incredible feat of engineering, sometimes erecting large-scale facilities within a few weeks. But building these emergency hospitals across the country came at a hefty price of over $660 million.

Nearly four months after Covid-19 emerged in the U.S., an NPR article perplexingly found that most field hospitals had not treated a single patient. The article explicitly explains that although the Army Corps of Engineers provided many facilities to treat Covid-19 patients, “there wasn’t enough planning to make sure these field hospitals could be put to use once they were finished.”

Lamenting this costly mistake, New York University Professor of Global Public Health Robyn Gershon expressed anguish, stating, “It’s so painful because what it’s showing us that the plans we have in place, they don’t work.”

Unfortunately, empty field hospitals are far from the only government plan to address the pandemic that hasn’t worked.

As Covid-19 outbreaks ravaged New York City and overwhelmed its hospitals, President Trump sent a naval hospital vessel equipped with a 1,200 man crew and 1,000 patient beds to provide relief. The boat returned a month later after treating fewer than 200 patients.

Government-provided efforts to distribute Covid-19 treatments haven’t fared any better. In May, drug producer Gilead Sciences donated 1.5 million doses of remdesivir, a drug which helps patients recover from Covid-19 more quickly, to the federal government to distribute to hospitals. After clinical trials found remdesivir to be more effective than previously thought, the government purchased nearly 90 percent of all remdesivir in production during August and September.

Despite having the largest supply of the drug, numerous hospitals have reported rationing remdesivir while other hospitals reported having much more than they need.

The government’s failure to effectively provide and distribute medical goods during the pandemic is frequent, expensive, and harmful. It is also predictable.

Nearly one-hundred years ago, Austrian economist Ludwig von Mises noted the folly in centralized distribution of goods in his essay, “Economic Calculation in the Socialist Commonwealth.” There, Mises explained that when centralized planners attempt to distribute goods, they often lack market prices established through voluntary exchanges, prices that are needed to determine where resources are most needed. Without prices to guide the distribution and production of goods, central planners are unable to determine what goods to produce and where to produce them.

Efforts by the federal government to build field hospitals and distribute Covid-19 treatments face the same problem. When government agents centrally plan where to allocate resources to mitigate the harms of the pandemic, scientific breakthroughs in providing treatment and impressive engineering feats ultimately result in squandered resources and efforts.

I have written on the repeated failures of government policy to address the pandemic before. However, with the United States recently surpassing 200,000 Covid-19 deaths and evidence for a second wave of the virus mounting, understanding how and why our government has failed to address the pandemic is as essential now as it was eight months ago.