In the mass paranoia over COVID-19, supplies of surgical masks are being depleted as non-surgeons seek the false comfort of covering their mouth and nose. Of course, individuals should be free to engage in useless activities, but their use of surgical masks poses a potential threat to health care professionals.
Some health care professionals are experiencing difficulty obtaining supplies of masks. Both the World Health Organization and the United States Surgeon General have urged the public to quit buying masks, as they are ineffective in stopping the spread of COVID-19.
Normally, when demand spikes and supply is insufficient, prices rise. That is a basic principle of economics. But when demand spikes because of an emergency or crisis, prices do not rise appropriately because of anti-gouging laws.
While such laws vary from state to state, they essentially prohibit businesses from charging “exorbitant” prices during an emergency. The result is a rapid depletion of the product’s supply.
As an example, in the days before Hurricane Harvey struck Houston, bottled water was increasingly difficult to find. Stores did not raise their prices, and so, many consumers bought “exorbitant” quantities of bottled water. However, if the businesses had raised their prices, consumers would have been more restrained in their purchases. Marginal buyers would have been priced out of the market.
The same is true of surgical masks. If sellers of masks could raise their prices without fear of prosecution, marginal buyers would be driven from the market. Certainly, those who value the masks more would have to pay a higher price. But higher prices and higher profits motivate individuals to produce more or find creative ways to bring a product to market.
The solution to the potential shortage of surgical masks isn’t government intervention in the market. The solution is for government to get out of the way and let the market function.