Our COVID-19 column provides insights from experts on the impact of the coronavirus on Nigeria


Free markets vs governments: What COVID-19 means for government intervention

Dr Temitope Oshikoya

Dr Temitope Oshikoya

Dr Temitope Oshikoya has a background in economics, finance, and law. He is also the co-author of Frontier Capital Markets and Investment Banking.

Should governments intervene in markets? 

This question is at the centre of the oldest debate in economics. One school of thought has argued that free markets work best on their own with little or no government influence. The slogan: markets know better, and governments create distortions. 

The other camp disagrees. They argue that markets often fail—think the financial crisis or global warming. Government intervention, they argue, must address market shortcomings. 

Economic textbooks assume that markets are populated with perfectly competitive firms and institutionalised by secure property rights and enforcement of reliable contracts. Alas, markets, especially in our climes, are neither perfect nor competitive; neither are property rights and contracts reliably enforced. 

Today's events provide more ammunition to the government intervention side of the debate. Even traditional free market champions like hedge funds managers are calling for aggressive government intervention. 

How could a free market possibly deal with COVID-19 without a government response?   

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