In context of COVID-19, one of the things governments can do and markets cannot, is to make wearing face masks mandatory. Spreading viruses around is a negative externality that has a potential to kill people, and yet is under normal circumstances perfectly legal. Government can make it illegal literally overnight.
With regard to resources, the advantage of the government is that it is generally insensitive to profit motive. They may say “in this disaster area, every person will get one liter of fresh water each day”, and you don’t have to worry about rich people (or people who panicked and decided to burn all their savings) buying all the water, because the government is not tempted to take their money.
Outside of disaster relief, the attitude “I don’t really care if we make huge profit or huge loss here, and I wouldn’t bother to pick up even the lowest-hanging fruit, because it’s not my personal money anyway” can cause a lot of damage. But during the disaster, it increases trust in following the original plan, regardles of financial incentives.
In context of COVID-19, one of the things governments can do and markets cannot, is to make wearing face masks mandatory. Spreading viruses around is a negative externality that has a potential to kill people, and yet is under normal circumstances perfectly legal. Government can make it illegal literally overnight.
With regard to resources, the advantage of the government is that it is generally insensitive to profit motive. They may say “in this disaster area, every person will get one liter of fresh water each day”, and you don’t have to worry about rich people (or people who panicked and decided to burn all their savings) buying all the water, because the government is not tempted to take their money.
Outside of disaster relief, the attitude “I don’t really care if we make huge profit or huge loss here, and I wouldn’t bother to pick up even the lowest-hanging fruit, because it’s not my personal money anyway” can cause a lot of damage. But during the disaster, it increases trust in following the original plan, regardles of financial incentives.