How Would the Free Market Solve the Corona Problem?

It is a fascinating question of how the free market solve the problem of the coronavirus? While I don’t know the exact answer, I strongly believe it would not outlaw flights, travel, events, work and shopping. These are all important and necessary things we need for our survival. 

But I can imagine that business would adopt practices aimed at reducing the risk of contracting the coronavirus.

For example if the airline were free to do so, they would institute inexpensive temperature screening before flights and deny flying to those who might carry a virus or bacteria. Today, they can’t deny passengers from boarding flights when they have a ticket or else they would sue the airlines and most like cause the loss of millions. The problem here is the monopolized legal system, but that’s the topic of future blog post.

In addition, the airlines could maintain lists of people who pose a risk, that such as people with certain conditions. But again, maintaining such “blacklists” is impossible with the current legal system. 

Because the corona-virus constitutes at its core a risk, insurances handle the job of risk/uncertainty in a free market. The price of the infectious-decease insurance premium would skyrocket during such times and would trigger the self-imposed wish to stay healthy. In practice, people would voluntarily implement practices that reduces the chances to contracting the corona-virus. This means we would voluntarily wear masks and gloves, wash our hands much more often, use sterilizers, refrain from mingling among crowds, etc.

In summary, since the corona virus constitutes an insurable risk and its premium would increase, people are incentivized to implement corona contracting procedures voluntarily in a free market and thus solve the problem of corona gracefully.

Dirk Wagner

About Dirk Wagner

Dirk Wagner is owner of Tutorz LLC. He holds a M.S. degree in computer science and has 8 years of experience as software engineer and researcher. Dirk has tutored math and computer science to dozens of students in Southern California. You can find him on Google+, youtube, facebook, twitter, tumblr, quora and pinterest.
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3 Responses to How Would the Free Market Solve the Corona Problem?

  1. Dirk Wagner says:

    Kevin Abrams commented on this post (https://www.facebook.com/groups/163104727054042/)

    I’m as free market as they come but it’s important to remember that the Coronavirus outbreak represents a massive externality (the actions of any one person can ‘ripple out’ and impose a serious cost on someone they’ve never even met)… there is a theoretical justification for collective action here. That’s not to say that the government’s actual response has been beneficial, just that in theory the self interest of individuals can’t do much to stop this one

  2. Dirk Wagner says:

    Hi Kevin!

    Thank you for you comment.

    You say “coronavirus outbreak represents a massive externality”. We as Austrians should understand that externalities is a concept of the main stream economists. It’s flawed because first, anything can be an externality, from you exhaling CO2 to you posting this comment. Second, its impossible to measure the cost of the externality. Or do you know the cost of your posting on the readers? Third, externalities cannot be generalized, instead negative affects of actions are always individual, and then they are the purview of property rights. For example, you exhaling CO2 might cause ocean levels to rise forcing coastal communities to build dams but to farmers it’s a boon as their crop grows better.

  3. Dirk Wagner says:

    What you claim is in the absence of governments people will infect each other with the coronavirus because they have no incentive to take preventive actions. That’s not true. The corona pandemic at its core constitutes a risk to our health. Risk is handled through insurance. During the time of crisis the insurance premium for staying healthy will skyrocket, thus incentivizing people to adopt preventive measures, that is wash hands frequently, refrain from mingling in crowds and wear masks.

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