Economic Theory and the Real World
Economic theory is useful because it helps explain what’s happening in the real world, which is complex and opaque. Last week, in the course of a conversation on the federal price controls on products related to the current emergency (When Free Market Prices Are Banned, April 1, 2020), I wrote:
The next step, if history is any guide, is to try and correct the failure of previous interventions with another one (until the next one): forbid exportations.
Today’s Wall Street Journal writes (“Faulty N95 Masks Hamper Hospitals on Coronavirus Front Lime,” April 9):
The Trump administration said Wednesday that it would restrict the export of certain masks and gloves for four months.
The story is interesting because it further illustrates the continuation of the humongous government failure we are witnessing: a government adding one control after another, in raging disorder, with a view to correcting the failure of its previous interventions.