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In 1960, the Nobel laureate economist Ronald H. Coase introduced the “problem of social cost”: Human activities often have negative externalities, so individual rights cannot be absolute. Institutions must intervene. There is no better example of this dynamic than the COVID-19 crisis.

While virtually every country has suffered as a result of the pandemic, some have done much better than others. Whereas some have reduced COVID-19 cases to near zero, others have had steadily climbing infection and death rates for months. As McKinsey & Co. has noted, economic activity associated with discretionary mobility has returned to normal for the former group. Among the latter, such activity remains about 40 percent below the pre-pandemic level.

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