3/31/20 Notable & Quotable: Gouging From Brandon Fuller's interview cally. At something close to normal with Paul Romer, University Profes- prices, it is unlikely that a firm will sor at New York University and co- buy the additional capital equip- recipient of the 2018 Nobel Prize in ment necessary for a many-fold in- Economics, City Journal, March 25: crease in their production capacity, only to meet a temporary surge in Fuller: So ubiquitous testing and demand. Firms won't be able to re- plentiful personal protective equip- cover their costs from capital ment are the keys to getting people equipment. back to work and restoring eco- nomic normalcy. How do we get about using things like the Defense from where we are today-short on Production Act and having the gov- tests and protective equipment-to ernment do what it has done to mo- where we need to be? How can pol- bilize resources during past wars. I icy induce more tests and more and think we need to be realistic that better equipment? Romer: There's an interesting cally or socially acceptable, govern- constraint here involving percep- ment will need to be creative, and tions of price-gouging. We may find other ways besides a temporar- need just to accept the fact that ily high price that can make it at- many people get very upset when tractive for firms to undertake a they see what they think of as price-gouging. And many firms the government might pay for the don't want their reputation dam- cost of the capital equipment aged because they are accused of it. needed to expand production and Economists know that this is ineffi- then lease it on a month-to-month cient, but it's just the reality. But basis to the firm so that the govern- it's also important to understand ment bears the risk of a quick end that a firm making N95 masks will need to scale production dramati- capacity obsolete. Số I think we have to be creative very high prices will not be politi- surge of production. For example, to the crisis that makes the excess