In the political response to the Covid-19 pandemic, everything is proceeding just as economist Robert Higgs has foreseen. But that doesn’t make it any easier for him to watch it. “I have an overwhelming feeling that I am reliving a bad experience I’ve lived through several times before, only this time it’s worse,” Higgs says. “I have no doubt that even if the current situation plays out in the best imaginable way, it will leave an abundance of legacies for the worse so far as people’s freedom is concerned.”
Higgs sees government, as usual, vastly expanding during the crisis, and he’s sure that it will not shrink back to its former scale once the crisis is over. It never does, as he famously documented in his 1987 book, Crisis and Leviathan: Critical Episodes in the Growth of American Government, and in later works exploring this “ratchet effect.”
By surveying the effect of wars, financial panics, and other crises over the course of a century, Higgs showed that most government growth occurs in sporadic bursts during emergencies, when politicians enact “temporary” programs and regulations that never get fully abolished. New Deal bureaucracies and subsidies persisted long after the Great Depression, for example, and the U.S. military didn’t revert to its prewar size after either of the world wars.
Besides charting the growth of government, Higgs identified the fundamental psychological cause. He recognized the political significance of the negativity effect, also called the negativity bias—the universal tendency of negative events and emotions to affect us more strongly than positive ones.
In our recent book on this bias, The Power of Bad, social psychologist Roy Baumeister and I drew on Higgs’s work to argue that the greatest problem in politics is what we call the Crisis Crisis—the never-ending series of crises, real or imagined, that are hyped by the media and lead to cures too often worse than the disease. It’s a perpetual problem because it’s so deeply rooted in human psychology, as Higgs explained in a 2005 essay, “The Political Economy of Fear.”
“To tell people not to be afraid is to give them advice that they cannot take,” Higgs wrote. “Our evolved physiological makeup disposes us to fear all sorts of actual and potential threats, even those that exist only in our imagination. The people who have the effrontery to rule us, who call themselves our government, understand this basic fact of human nature. They exploit it, and they cultivate it.” Rulers instinctively heed Machiavelli’s advice: “It is much safer to be feared than loved”—a sixteenth-century formulation of the negativity effect.
“Without popular fear, no government could endure more than twenty-four hours,” Higgs wrote, explaining how the earliest kingdoms were founded by warriors who augmented their authority with the help of religious leaders. “The warrior element of government puts the people in fear for their lives, and the priestly element puts them in fear for their eternal souls. These two fears compose a powerful compound—sufficient to prop up governments everywhere on earth for several millennia.”
Then, in the nineteenth century, came new fears to justify the creation of the welfare state. As Higgs noted: “People were told that the government can and should protect them from all sorts of workaday threats to their lives, livelihoods, and overall well-being—threats of destitution, hunger, disability, unemployment, illness, lack of income in old age, germs in the water, toxins in the food, and insults to their race, sex, ancestry, creed, and so forth. Nearly everything that the people feared, the government then stood poised to ward off.”
As eager as politicians are to expand the government, in normal times they’re able to do so only slowly. People always fear tax increases, and a proposal to benefit one special interest will typically be opposed by another, creating a political logjam. But when a new threat like Covid-19 suddenly arises, the logjam is broken, as Higgs described in a 2009 essay, “The Political Economy of Crisis Opportunism.”
“A crisis,” Higgs observed, “alters the fundamental conditions of political life. Like a river suddenly swollen by the collapse of an upstream dam, the ideological current becomes bloated by the public’s fear and apprehension of impending dangers and its heightened uncertainty about future developments. Bewildered people turn to the government to resolve the situation, demanding that government officials ‘do something’ to repair the damage already done and prevent further harm.”
Politicians—aided by media hysteria—seize the opportunity to dispense funds, create new programs, and enact proposals that had languished before the crisis. The current pandemic, for instance, has given protectionists a new excuse for restricting international trade. Progressives in Congress have tried to create new protections for workers and immigrants, subsidies for alternative energy, and mandates for diversity programs. Trillions have been added to the national debt with little debate because criticism becomes taboo during a crisis. During World War II, the conversation stopper was, “Don’t you know there’s a war on?” Today it’s repurposed by substituting “pandemic” for “war,” and accompanied by solemn declarations like, “A human life is priceless.”
The Covid-19 lockdown measures are supposed to be temporary, but Higgs expects them to endure due to another consequence of the negativity effect: because bad events have more impact than good ones, people strive harder to avoid losses than they do to achieve gains. As a result, any new government program typically creates a powerful coalition committed to its preservation: an “iron triangle” consisting of a legislative committee, an administrative bureaucracy, and a group of special interests reaping benefits from the program.
“Attempts to eliminate or diminish emergency programs,” Higgs wrote, “run up against a fundamental principle of political action: People will fight harder to keep an established benefit than they will fight to obtain an identical benefit in the first place. This asymmetry assists every effort to hang onto iron triangles created or enlarged during a crisis.”
Could this crisis turn out differently? Fans of smaller government have been cheered by the suspension of hundreds of harmful regulations during the pandemic, such as the Food and Drug Administration’s rules slowing test development and the laws restricting telemedicine and preventing doctors from working outside their home states. Couldn’t some of these rules disappear permanently now that people have seen the alternative? Maybe, but Higgs is convinced that the overall result will still be dreadful.
“I believe the crisis will produce a net increase in the government’s size, scope, and power,” he says. “That includes regulations. Some may be scrapped, but those that have been set aside in response to the crisis will likely be reinstated after the crisis has waned, because the political forces that caused them to be created in the first place will still exist—same special-interest lobbies, same politicians selling favors to the highest bidder, same capacity to slip anti-competitive clauses into huge statutes, and so forth.” The only way to curtail such overreach, he adds, is to “shrink the power of the state, and it will be a cold day in hell when that happens.”
It certainly won’t happen any time soon, given the unprecedented shutdown of the economy and abrogation of civil liberties—mostly done with widespread approval, according to public-opinion surveys. It may seem astonishing for Americans to surrender their freedom so willingly, but Higgs isn’t surprised.
“Americans, for the most part, are so liable to being terrified by government agencies and their kept media that they lose almost all judgment when told that a horrible threat of mass death hangs over them,” he says. “I foresee the worst depression since the Great Depression right around the corner. That alone would be enough to bring forth a host of bad government policies with long-lasting consequences. Many such policies have already been adopted. But much more awaits us along these lines.”
I fear he’s right, but at least we have his warnings to guide us in this crisis. While the negativity effect is wired into the primal region of our brains, we also have the rational capacity to override it. We could learn from history—and gain a new appreciation for a much-quoted line in Franklin D. Roosevelt’s first inaugural address. When FDR said that the only thing we have to fear is fear itself, he was offering excellent but incomplete advice. Besides fearing our own irrationality, we should fear leaders who exploit it during a crisis.
John Tierney is a contributing editor of City Journal, a contributing science columnist for the New York Times, and co-author of The Power of Bad: How the Negativity Effect Rules Us and How We Can Rule It.
In my lifetime, there was another deadly flu epidemic in the United States. The flu spread from Hong Kong to the United States, arriving December 1968 and peaking a year later. It ultimately killed 100,000 people in the U.S., mostly over the age of 65, and one million worldwide.
Lifespan in the US in those days was 70 whereas it is 78 today. Population was 200 million as compared with 328 million today. It was also a healthier population with low obesity. If it would be possible to extrapolate the death data based on population and demographics, we might be looking at a quarter million deaths today from this virus. So in terms of lethality, it was as deadly and scary as COVID-19 if not more so, though we shall have to wait to see.
“In 1968,” says Nathaniel L. Moir in National Interest, “the H3N2 pandemic killed more individuals in the U.S. than the combined total number of American fatalities during both the Vietnam and Korean Wars.”
And this happened in the lifetimes of every American over 52 years of age.
I was 5 years old and have no memory of this at all. My mother vaguely remembers being careful and washing surfaces, and encouraging her mom and dad to be careful. Otherwise, it’s mostly forgotten today. Why is that?
Nothing closed. Schools stayed open. All businesses did too. You could go to the movies. You could go to bars and restaurants. John Fund has a friend who reports having attended a Grateful Dead concert. In fact, people have no memory or awareness that the famous Woodstock concert of August 1969 – planned in January during the worse period of death – actually occurred during a deadly American flu pandemic that only peaked globally six months later. There was no thought given to the virus which, like ours today, was dangerous mainly for a non-concert-going demographic.
Stock markets didn’t crash. Congress passed no legislation. The Federal Reserve did nothing. Not a single governor acted to enforce social distancing, curve flattening (even though hundreds of thousands of people were hospitalized), or banning of crowds. No mothers were arrested for taking their kids to other homes. No surfers were arrested. No daycares were shut even though there were more infant deaths with this virus than the one we are experiencing now. There were no suicides, no unemployment, no drug overdoses.
Media covered the pandemic but it never became a big issue.
As Bojan Pancevski in the Wall Street Journal points out, “In 1968-70, news outlets devoted cursory attention to the virus while training their lenses on other events such as the moon landing and the Vietnam War, and the cultural upheaval of the civil-rights movements, student protests and the sexual revolution.”
The only actions governments took was to collect data, watch and wait, encourage testing and vaccines, and so on. The medical community took the primary responsibility for disease mitigation, as one might expect. It was widely assumed that diseases require medical not political responses.
It’s not as if we had governments unwilling to intervene in other matters. We had the Vietnam War, social welfare, public housing, urban renewal, and the rise of Medicare and Medicaid. We had a president swearing to cure all poverty, illiteracy, and disease. Government was as intrusive as it had ever been in history. But for some reason, there was no thought given to shutdowns.
Which raises the question: why was this different? We will be trying to figure this one out for decades.
Was the difference that we have mass media invading our lives with endless notifications blowing up in our pockets? Was there some change in philosophy such that we now think politics is responsible for all existing aspects of life? Was there a political element here in that the media blew this wildly out of proportion as revenge against Trump and his deplorables? Or did our excessive adoration of predictive modeling get out of control to the point that we let a physicist with ridiculous models frighten the world’s governments into violating the human rights of billions of people?
Maybe all of these were factors. Or maybe there is something darker and nefarious at work, as the conspiracy theorists would have it.
Regardless, they all have some explaining to do.
By way of personal recollection, my own mother and father were part of a generation that believed they had developed sophisticated views of viruses. They understood that less vulnerable people getting them not only strengthened immune systems but contributed to disease mitigation by reaching “herd immunity.” They had a whole protocol to make a child feel better about being sick. I got a “sick toy,” unlimited ice cream, Vicks rub on my chest, a humidifier in my room, and so on.
They would constantly congratulate me on building immunity. They did their very best to be happy about my viruses, while doing their best to get me through them.
If we used government lockdowns then like we use them now, Woodstock (which changed music forever and still resonates today) would never have occurred. How much prosperity, culture, tech, etc. are losing in this calamity?
What happened between then and now? Was there some kind of lost knowledge, as happened with scurvy, when we once had sophistication and then the knowledge was lost and had to be re-found? For COVID-19, we reverted to medieval-style understandings and policies, even in the 21st century. It’s all very strange.
The contrast between 1968 and 2020 couldn’t be more striking. They were smart. We are idiots. Or at least our governments are.
[Note an earlier version of this article featured a photo not from Woodstock 1969. This photo from the montage at the Atlantic.]
Jeffrey A. Tucker is Editorial Director for the American Institute for Economic Research.
Do quick shutdowns work to fight the spread of Covid-19? Joe Malchow, Yinon Weiss and I wanted to find out. We set out to quantify how many deaths were caused by delayed shutdown orders on a state-by-state basis.
To normalize for an unambiguous comparison of deaths between states at the midpoint of an epidemic, we counted deaths per million population for a fixed 21-day period, measured from when the death rate first hit 1 per million—e.g.,‒three deaths in Iowa or 19 in New York state. A state’s “days to shutdown” was the time after a state crossed the 1 per million threshold until it ordered businesses shut down.
We ran a simple one-variable correlation of deaths per million and days to shutdown, which ranged from minus-10 days (some states shut down before any sign of Covid-19) to 35 days for South Dakota, one of seven states with limited or no shutdown. The correlation coefficient was 5.5%—so low that the engineers I used to employ would have summarized it as “no correlation” and moved on to find the real cause of the problem. (The trendline sloped downward—states that delayed more tended to have lower death rates—but that’s also a meaningless result due to the low correlation coefficient.)
No conclusions can be drawn about the states that sheltered quickly, because their death rates ran the full gamut, from 20 per million in Oregon to 360 in New York. This wide variation means that other variables—like population density or subway use—were more important. Our correlation coefficient for per-capita death rates vs. the population density was 44%. That suggests New York City might have benefited from its shutdown—but blindly copying New York’s policies in places with low Covid-19 death rates, such as my native Wisconsin, doesn’t make sense.
Sweden is fighting coronavirus with common-sense guidelines that are much less economically destructive than the lockdowns in most U.S. states. Since people over 65 account for about 80% of Covid-19 deaths, Sweden asked only seniors to shelter in place rather than shutting down the rest of the country; and since Sweden had no pediatric deaths, it didn’t shut down elementary and middle schools. Sweden’s containment measures are less onerous than America’s, so it can keep them in place longer to prevent Covid-19 from recurring. Sweden did not shut down stores, restaurants and most businesses, but did shut down the Volvo automotive plant, which has since reopened, while the Tesla plant in Fremont, Calif., was shuttered by police and remains closed.
How did the Swedes do? They suffered 80 deaths per million 21 days after crossing the 1 per million threshold level. With 10 million people, Sweden’s death rate‒without a shutdown and massive unemployment‒is lower than that of the seven hardest-hit U.S. states—Massachusetts, Rhode Island, Louisiana, Connecticut, Michigan, New Jersey and New York—all of which, except Louisiana, shut down in three days or less. Despite stories about high death rates, Sweden’s is in the middle of the pack in Europe, comparable to France; better than Italy, Spain and the U.K.; and worse than Finland, Denmark and Norway. Older people in care homes accounted for half of Sweden’s deaths.
We should cheer for Sweden to succeed, not ghoulishly bash them. They may prove that many aspects of the U.S. shutdown were mistakes—ineffective but economically devastating—and point the way to correcting them.
Mr. Rodgers was founding CEO of Cypress Semiconductor Corp.
My intrepid Mercatus Center colleague – and fellow AIER columnist – Veronique de Rugy e-mailed to me recently this lament:
Even acknowledging the public health crisis, in many cases on dubious authority state and local officials are closing stores and imposing all sorts of restrictions on people. Trump also is obviously not thinking very carefully about what is constitutional for him to do or not. For instance, he has no powers to reopen everything by Easter. Meanwhile, his decisions feel quite hectic. Yesterday he considered, for instance, closing parts of NJ, NY and CT. He reversed course later in the day. Also, Congress and the president are using this crisis as an excuse to dole-out whatever goodies they see fit. America will be transformed by this political hyperactivity, and not for the best. Yet people seem to accept their fate and the risk of tremendous and permanent expansion of government powers without much if any objections.
Vero’s e-mail brought yet again to mind a book that I’ve lately been pondering quite a lot: economic historian Robert Higgs’s 1987 volume, Crisis and Leviathan. In this richly documented work, Higgs convincingly shows that with each national crisis government power ratchets up. The crisis might be fully genuine or inflated or utterly mythical; it matters not. Whenever there prevails widespread belief that a crisis looms, people turn to the state for help. And turning to the state for help during times of crisis always results, in practice, in granting to the state new powers.
Let’s avoid the immediate and existential danger; we’ll worry about the precedents, costs, and other consequences of today’s crisis-mode actions later – such is the popular attitude.
Typically, the quantum of additional powers granted to – or seized by – government during each crisis shrinks somewhat when the crisis passes. Normal times, after all, aren’t crisis times. But never do such additions to state power fully disappear. Government’s exercise of these powers is perceived as having been key to escaping the crisis – so such powers become more widely regarded as being beneficial. Fear of such powers is lessened.
The fact that this happy perception of the consequences of such powers is, at least to some degree, always an illusion conjured by the propaganda that government officials inevitably deploy to justify their exercise of their new powers is irrelevant. If people believe that this new grant of power and that new expansion of authority as used by government officials were both effective and necessary to the nation’s escape from Armageddon, people naturally lose some of the skepticism they had, pre-crisis, about such power and authority.
As summarized by Higgs, “each time the government expands its effective authority over economic decision-making, it sets in motion a variety of economic, institutional, and ideological adjustments whose common denominator is a diminished resistance to Bigger Government.”
This resulting ratcheting upward of state power depends significantly upon historical circumstances. These circumstances obviously include triggering events, such as when the words or deeds of some foreign government provoke military action, when devastating hurricanes and other natural disasters strike, or when pandemics sweep in. But these circumstances include also the attitudes and personalities of the individuals who are currently charged with making policy decisions.
Consider that had the largely non-interventionist Pres. Calvin Coolidge’s 16-year-old son not died suddenly from a staph infection at the White House in 1924, Coolidge might have chosen to run for re-election in 1928. And had he won, he surely would have responded with fewer unprecedented interventions than were unleashed by the “Progressive”-minded Pres. Herbert Hoover.
As implied by an argument that Higgs offers in another important book – Depression, War, and Cold War (2006) – it’s likely that a less-interventionist response to the economic events of late 1929 and the early 1930s would have avoided transforming an economic downturn into an unprecedented Great Depression. In turn, the New Deal might never have happened.
But happen it did.
Contrary, therefore, to the conventional wisdom of ECON 999, state power isn’t created and used only according to objective, detached, scientific criteria. Politicians and bureaucrats are not altruistic ciphers, standing above the tempest of historical contingencies, surveying reality and intervening only if, when, and to the extent that they detect, with their scientific tools, “social” costs and benefits diverging from “private” costs and benefits.
No, says Higgs: “None of the standard theories recognizes the extent to which the development of Big Government was a matter not of logic, however complicated and multidimensional, but of history…. [R]eal political and socioeconomic dynamics are ‘messier,’ more open to exogenous influences or shocks and less determinate in their outcomes than the theorists suppose. Critical events may turn on nothing more substantial than the whim of a President or the ideology of a single Supreme Court justice.”
Furthermore, as the example of Calvin Coolidge and Herbert Hoover suggests, those individuals who obtain and retain positions of power in government tend to be those who are most interested in possessing and exercising such power. For each crisis, then, the likelihood is that the ideology of the holders of power prompts them, not to keep their power in check, but to expand it. And as power expands in a ratcheting-upward way, power becomes ever-more valuable and intoxicating to possess – meaning that competition to grab power becomes ever-more intense. This increasingly intense competition for power, in turn, selects those persons who are both most hungry for power and least bound by ethical restraints in pursuing and using it.
Growing Accustomed Even to Unwarranted Burdens
Only further encouraging this ratcheting-up of state power is an unfortunate decision-making trait in voters identified by economics Nobel-laureate James Buchanan. In his relatively unknown but deeply insightful 1967 book, Public Finance In Democratic Process, Buchanan argued that when voters become accustomed to any existing tax, they thereby become less resistant to using the proceeds of that tax to fund new projects. And so if the original project for which the tax was instituted shrinks in importance such that government need spend less money on that project, rather than have the tax shrink, government instead finds new projects to fund with the revenues from the existing tax. Buchanan argues that the same citizens who would object to funding new projects with a new tax are typically content to fund new projects with an old tax.
Anticipating the thesis developed much more fully twenty years later by Robert Higgs, Buchanan wrote:
Experience suggests that, almost universally, tax and public spending rates which are increased, temporarily, to meet wartime or other emergency fiscal needs remain substantially higher in post-war, post-emergency periods than before…. Wartime spending needs are such that the threshold of decision can be crossed with newly imposed taxes or with substantial increases in rate levels of existing taxes. The additional real costs, in opportunity cost terms, of the expanded spending program is accepted in the emergency setting. Once these needs disappear, however, the bias is shifted in favor of a continued high level of public activity, as opposed to a return to some pre-emergency balance between the public and private sector. Not having to undergo the apparent sacrifice of real resources generated by new tax financing, the individual is more willing, in post-emergency periods, to approve spending on the provision of services than he should have been in the pre-emergency setting.
The relevance of Higgs’s and Buchanan’s insights into today’s crisis is evident.
Donald J. Boudreaux is a senior fellow with American Institute for Economic Research
Amid all the negativity of late, one bit of good news has come via the internet. In particular, Americans haven’t suffered slower internet speeds despite a reported uptick in home computer use related to work, along with the frenzied streaming of movies and documentaries on portals like Netflix.
About all this, Farhad Manjoo ought to apologize to his readers. Back in 2017 he wrote a piece for the New York Times titled “Without Neutrality, Say So Long to the Internet.” Whoops!
Funny about it is that readers can bet Manjoo is scribbling yet another misguided column from home as you’re reading this. He’ll file it on his WiFi-enabled computer with ease, before engaging in all manner of internet-based activity despite his downcast prediction from just a few years ago.
Oh well, enough about Manjoo. The remarkable internet speeds that Americans are enjoying speaks to a crucial truth about what powers the productivity without which there is no economic growth. The latter is a consequence of private investment. Thanks to copious investment in broadband by the profit-motivated, Americans are more and more productive. Better yet, they can be quite a bit more productive from anywhere thanks to ceaseless investment in technology that makes it possible for us to be connected at all times.
Thinking about all this through the prism of a tragic economic lockdown that is harming everyone, but that is hurting those with the least the most, one reason tone deaf and economically illiterate politicians arguably feel comfortable shutting down the economy is a consequence of the ubiquity of high-speed internet. Where politicians live, and with whom they rub elbows, work is increasingly what we do anytime, from anywhere thanks to internet speeds that rise all the time.
Unfortunately and tragically, the political class forgot that not everyone’s like them such that they can “work remotely” for several weeks, or months. For the less fortunate, work is a destination. It frequently involves meeting the needs of people in person. Which means a high number of workers are experiencing layoffs, business closures and financial ruin as a consequence of the brutally cruel non sequitur foisted on them by politicians: a virus threatens, so shut down the very economic engine that has been crushing virus and disease for decades. It makes one sick to think about. Unfortunately, the same politicians who’ve brought on economic devastation and ruin for all too many are in the process of adding to their egregious error.
To understand why, consider the $2 trillion “stimulus” bill already passed. That it won’t stimulate is a statement of the obvious. The growth already occurred. That’s how Congress was able to raise the $2 trillion.
To clarify the previous assertion, consider a poor country like Peru. It’s not as though its politicians aren’t hopelessly Keynesian like the ones in the U.S. Rest assured they are. They spend less simply because Peruvians are exponentially less productive than Americans are. Politicians in Peru have arrogated to themselves a percentage of Peruvian private sector production that’s likely similar in percentage terms to what U.S. politicians take from us. The government spending difference is a result of Peruvian production that is a tiny fraction of the size of U.S. production. To be clear, governments can only spend insofar as the private sector creates wealth that they can tax, then redistribute.
Repeat again and again: governments cannot stimulate with spending. The growth already occurred, hence their ability to wastefully spend.
All of this must be considered with the high-speed internet example that began this piece very much in mind. We have internet speeds that continue to soar, and because they do, work for a growing number has yet again become a productive endeavor from anywhere. In other words, 4G internet speeds on phones and home internet speeds much greater led to abundant job creation that was impossible before those speeds (think Uber, for example), along with soaring work portability.
Imagine then, what 5G will bring to individual productivity, along with jobs previously unimaginable. And if 5G is amazing, in time even more investment will render the 5G that people talk about now in awestruck fashion as wildly pedestrian and primitive. Investment relentlessly pushes individual productivity upward, all the while transforming how and where we produce.
Please now consider the happy truth about investment in terms of shrinking job prospects for everyone, but most cruelly shrinking prospects for those with the least. It’s apparent politicians are about to bring even greater harm to those already devastated by their actions.
Having wrecked their economic situations via lockdown, politicians who bring new meaning to self-unaware arrogated to themselves even more of the wealth always and everywhere produced in the private sector with an eye on sending checks to individuals and businesses. Basically politicians put people out of work, and put businesses on the verge of bankruptcy, only to then throw money at those victimized as if $1,200 would make up for jobs lost, and businesses destroyed.
This rates a lot of attention when it’s remembered that the $2 trillion redistributed from those most likely to invest to those least likely to invest is set to increase by many trillions. Translated, politicians put millions of Americans out of work, and now they’re in the process of extracting trillions more from the private economy that, if not redistributed, would exist as investment necessary to get Americans working again.
The money not spent by Congress would, among other things, fund future internet speeds and communications advances that would make the present seem dated by comparison. Crucial is that some of the advances authored by private investment would put even more of us in the position to at least somewhat work around the errors of politicians who, when presented with a virus, chose to destroy the jobs of millions as a response.
Alas, future progress will be slower thanks to politicians who, having wrecked all too many lives, decided to wreck more through even more spending.
If you’re not a libertarian after this crack-up, you should have your head examined.
Defense Production Act Coordinator Peter Navarro claimed during a live TV interview on March 29th that “we know exactly what we need” to reduce the spread of the Wuhan Virus and treat infected Americans. He continued, “We have to expand and repurpose our industrial base.” It gets even better, “We have to make sure we’re able to make the medicines we need, the medical equipment, and the supplies. That’s going to create millions of jobs for this country.”
Superficially, this makes sense. After all, the shallow surface is where most public discourse takes place, thanks to compulsory progressive education and national media nitwits. As political economist and Poetic Justice Warrior Robert Higgs explains in his vital 1987 book Crisis and Leviathan,
The most important legacy of the New Deal is the now-dominant ideology of the mixed economy, which holds that the government is an immensely useful means for achieving one’s private aspirations. That one’s resort to this reservoir of benefits is perfectly legitimate.
In the spirit of the public good, it would he helpful to give Navarro’s comments some depth. Beginning with, “we know exactly what we need,” is typical collectivist fantasy. With all due respect, he was speciously correct – for the few seconds prior to the next segment of the broadcast. It featured a new 3D printed ventilator being developed independently at Rice University. While the proper use of ventilators is very complex, this one will cost $300 to produce compared to $10,000 for Navarro’s government approved machines.
To “repurpose our industrial base” is simply authoritarian economic planning, right wing and left wing. Its only a matter of degree. Navarro’s purpose is to “make sure the components are there when we need them.” This sounds good to passive minds, but who or what is “we?”
To the progressively schooled listener it means “the public good.” To active minds, it is evidence of coercive government overreach. The tactic is merely bucolic and ambiguous language to mask the primary purpose of concentrated decision making. As Higgs continues,
To take – indirectly if not directly – other people’s property for one’s own benefit is now considered morally impeccable, provided that the taking is effected though the medium of the government.
Yet Navarro’s poorly trained economic mind claims omniscience over the manufacture and distribution of pharmaceuticals, medical devices, and protective gear for health care professionals. Never mind that it is in short supply because of legacy government intrusion in nearly every aspect of American health care finance and delivery. Combined, they show little regard for specialization, division of labor, and price discovery that are fundamental achievements of Western civilization.
As Higgs explains in his 2002 essay titled The Rise of the West,
The individualism of Western culture, and the political fragmentation of the European peoples in the high Middle Ages, fostered the institutional and technological experimentation by which entrepreneurs could discover how to make labor and capital more productive.
“Going to create millions of jobs” denies reality, government can only create government jobs or get out of the way. Yet this phrase is prized by both left-wing and right-wing political minds, and disregards the real job creators. Economic minds understand employment as Say’s Law, or the Law of Markets – production creates its own demand. It is the foundation of all rational economic theory, and Higgs’ example of economic reality,
Europe’s governments that made life difficult for traders tended to lose their business, and hence a tax base, to competing jurisdictions. Such losses motivated rulers to curb their predation and to allow businessmen room to maneuver.
As illustrated by the Atlas Society, the novel contagion fomented in bat caves in China, ferried to Wuhan’s wet markets, festered in human hosts, and was fostered by its ultimate guardian – the paranoia of China’s totalitarian regime. While Western civilization is built on the solid footings of the scientific method (reason), free markets (purpose), and self-creation (pride); for the East, not so much. As Higgs relates,
In contrast to Europe, businessmen in China suffered an inescapable clampdown. In the Islamic world, an imperial government failed to protect private-property rights. The Soviet empire likewise embraced the imposition of one big bad idea, central economic planning.
In today’s 21st century America, the Crisis is the Wuhan Virus, and the Leviathan is our political, media, and education institutions. However, it’s different this time. Pretend for a second that you’ve never heard that before. During the previous one hundred years, the Leviathan created economic crisis and prescribed economic solutions rooted in the Keynesian myth of aggregate demand, supported by its nonexistent multiplier effect.
Today however, the solution for the epidemic includes castration of supply-side of economic activity. You know, the side that prevents poverty, despair, and death. This stark reality is deeper than a health crisis solved by urgent “flattening the curve” public policy, social distancing, and hygiene. It is the suspension of Constitutional rights and human life-sustaining purpose.
What’s disturbing is the willingness of so many people to accept the repeal of their personal liberties based on projections using unreliable data sets. As Robert Higgs observed,
Few Americans know much about the history of Argentina or Venezuela. But if they wish to know how the people of the USA are ruining their own country, all they have to do is look around themselves, including, in most cases, looking in the mirror.
Media pundits are also vulnerable. Considered predominately right-wing, FOX News is pushing massive government spending to replace individual livelihoods by using the left’s own rationale for social justice: “through no fault of their own.” On the surface, this makes sense because of the government forced shutdown, but ignores the deeper economic and philosophical damage, and merely robs from past and future productivity.
A market’s price discovery mechanism is too complex to mess with, and the longer people are denied the freedom to produce, the longer it will take to rebuild supply chains. The emotional and financial damage to millions of Americans will be inestimable, and is being pumped by shows like CBS 60 Minutes who seem to take pleasure in the demise of the West. In contrast, local news outlets are reporting stories of civil disobedience in their medical and business communities against FDA hegemony, and having wonderful outcomes.
As poetic justice would have it, this pandemic is a lesson in the proper role of government for defending individuals from the clear and present danger of epidemic disease. It is also shining a bright light on the superiority of free-market health care delivery, the generosity of a society rooted in personal liberty, and the ability of minds unleashed by economic freedom to solve any problem. Here, Higgs invokes the combined genius of Enlightenment philosopher John Locke and Austrian economist Ludwig von Mises,
Like all who inherit the Lockean tradition, Mises believed that a strong but limited government, far from suffocating its citizens, allows them to be productive and free.
The popular Western interpretation of ‘crisis’ in the Chinese language means opportunity. Will the breakdown of health care regulations wake America up to their disastrous effects, or we will ratchet up a more powerful Leviathan? Teacher Lisa VanDamme gives us the principled answer, “Extensive knowledge of the consequences of history’s ideas and actions; of the great discoveries of science and what they made possible. These are the raw material from which rational moral principles are drawn.” As Poetic Justice Warrior Robert Higgs advises,
The two issues call forth moral considerations. They involve not questions of what is technically better or worse. Rather, they involve good and evil. Those who propose to deal pragmatically with such questions are doomed to fail.
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