Emergency Central Planning

Normally, everyone is the best authority on what they need.

Everyone is the best expert on their wants, their desires, because wants are highly varied and individual and therefore hard to predict.

Needs, on the other hand, are objective and basic. People need food, shelter, etc.

then price signals are still a very strong tool.

The main objection to the free market approach is that allowing prices to rise prevents some people getting what they need.

The fact that someone is willing to buy something tells you some combination of: they need it, or they want it, and they can afford it. Price mechanisms don't rule out wealthy people from buying up things they don't need.

The fact that someone does not buy something tells you some combination of: they don't need it or they don't want it, or they can't afford it. The poor person who does not buy newly expensive supplies during an emergency might need them desperately.

But people all suddenly wanting the same few things they didn’t anticipate they would want dramatically levels the playing field between the two approaches.

Competent central provision outperforms both the options you have considered: the free market, and incompetent central provision.

Because central planning is so out of fashion, we have mostly forgotten how to do it well. Yet there are little known historical methods that could be applicable in the current crisis, such as input-output analysis, as Steve Keen writes:

One key tool that has fallen out of use in economics is input-output analysis. First developed by the non-orthodox economist Wassily Leontief (Leontief 1949; Leontief 1974), it used matrix mathematics to quantify the dependence of the production of one commodity on inputs of other commodities. Given its superficial similarity to Walras’ model of tatonnement, it was rapidly adopted by Neoclassical economists, and it became an integral part of mainstream macroeconomics back when “general equilibrium” meant “equilibrium of all the markets in a multi-market economy at one point in time”. It was known as CGE: “Computable General Equilibrium”. When I did my PhD on modelling Minsky’s “Financial Instability Hypothesis” (Keen 1995), virtually every other Economics PhD student at the University of New South Wales was building a CGE model of his or her national economy.

If economists were still skilled today in CGE analysis, then they could easily have answered some vital questions for policymakers during the Coronavirus crisis. The most pressing economic is, “if we identify which products are critical, and the level of output needed to sustain the population during 4-8 weeks of lockdown, can you tell us which other products are critical to maintaining that output, and how many workers are needed?”

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.