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This Is Not the Time to Let the Market Decide

One symptom of the coronavirus pandemic has been an explosion of economic nationalism around the world. Many countries, including the United States and members of the European Union, have erected export controls to prevent scarce goods like protective masks, gowns, gloves, ventilators and testing kits from being sold abroad. And global competition to purchase these goods is playing out like the plot of a bad action movie with accusations that planes full of Europe-bound masks have been diverted at the last minute to the United States. A German official has accused the United States of “modern piracy.”

This competition threatens to raise the prices of these goods to dangerous levels — or make it impossible to procure them at all. In early February, Tedros Adhanom Ghebreyesus, the director general of the World Health Organization, warned that prices for some protective equipment had risen to 20 times their normal amount. As the coronavirus continues to spread, this situation will become particularly dire for countries that cannot afford to keep pace.

In Brazil, which is facing a serious outbreak of the virus, widespread testing has been held back by a shortage of necessary chemical reagents, as global supplies are bought up by much richer countries like the United States. The situation is even worse in Africa: The Central African Republic, one of the world’s poorest countries, is estimated to have only three ventilators available for a population of more than four million. In Liberia, there may be none. In some African countries, officials are paying 10 times the normal amount for expired protective masks — if they can find them at all.

It has become common in recent weeks to invoke World War II in the fight against the coronavirus, in particular wartime industrial mobilization. But to solve the most pressing problems — and save the most lives — it may be more helpful to look to another wartime example.

During World War I, the Allies faced a similar problem: Shortages for key goods were being exacerbated by uncontrolled international competition on private markets. Even as the Allied countries fought a shared enemy, the Central Powers, they competed to purchase goods they needed — such as wheat and various raw materials — from abroad, needlessly complicating their joint war effort. The shortages got so bad by 1917-18 that some officials in the European Allied countries thought that it threatened them with outright defeat, as their war economies teetered on the brink of collapse and their civilian populations grew exhausted.

Read entire article at New York Times