Reflecting on Crisis and Leviathan in the age of the pandemic

Not very long ago, President Trump tweeted, "We cannot let the cure be worse than the problem itself."  He was pilloried for daring to suggest that government action with respect to the coronavirus pandemic has both benefits and costs.  Now he appears to be "all-in" on the national lockdown and more in sync with "expert" opinion and the big blue-state governors.

Given that we don't possess the luxury of hindsight, we don't know if this is the correct move or not.  But what's indisputable is that this approach to a pandemic is unprecedented in America.

Recently, Manhattan's City Journal published the reflections of Clark Whelton, a former speechwriter for New York City mayors Ed Koch and Rudy Giuliani, who remembered living through the pandemic of 1957, known at the time by the politically incorrect label "the Asian Flu."  The virus was responsible for the deaths of over a million people worldwide and 116,000 in the United States (which at the time had about half the current population).  And, yet, as Whelton recalls:

[T]o the best of my knowledge, governors did not call out the National Guard, and political panic-mongers did not blame it all on President Eisenhower. College sports events were not cancelled, planes and trains continued to run, and Americans did not regard one another with fear and suspicion, touching elbows instead of hands. We took the Asian flu in stride. We said our prayers and took our chances.

One can speculate as to why two different eras produced such differences in reaction.  There was no internet then, no 24-hour cable news networks, and no social media.  And you had an adult population for whom the Great Depression was a clear and vivid memory.

This all brings to mind an old book that now seems suddenly relevant — Crisis and Leviathan by economic historian Robert Higgs.  In the book, which is subtitled "Critical Episodes in the Growth of Government," Higgs introduced a key concept that he called "the ratchet effect."  He noted that the power of government grows during times of crisis, such as war or national depression.  Higgs observed that once the crisis passes, the newly acquired power of the State doesn't recede back to its original level.  Thus, each crisis leaves the government more powerful than before.  As Higgs explained:

After the ideological transformation that took place during the Progressive Era, each genuine crisis has been the occasion for another ratchet toward Bigger Government.

Politicians on both sides have recognized this.  Ronald Reagan once stated that "nothing lasts longer than a temporary government program."  And Rahm Emanuel famously stated that "you never let a serious crisis go to waste."

Authorities rarely do.  Already, this crisis has taken its toll on personal and economic liberty.  On dubious authority, state governors are threatening the civil liberties of individuals who violate their lockdown edicts.  The mayor of L.A. has decided to shut off water and power to all "nonessential" businesses in Los Angeles that haven't closed.  What will happen to all this newly acquired power once the crisis passes?

On the economic side, the federal government has approved spending of $2 trillion, half as much as the current budget, with more being planned in the future.

Economist Brian Wesbury worries about the ratchet effect on the economy.  He wrote:

It's important that the expansion of government is not made permanent.  The New Deal took annual federal spending from about 3% of GDP to about 10% of GDP (before World War II) and we never went back, or even close.  Policymakers need to avoid making COVID19 an excuse for another permanent leap upward in the size of government, which would erode future living standards versus where they would otherwise go.

Certainly, if government mandates the closure of business, then it is obligated to provide relief.  But government relief, enormous as it is, is a mere palliative.  The economy will not revive until private business is allowed to reopen.

If the shutdown is long enough that it results in an economic depression, it will fuel yet more government regulations and spending, and most likely dire political consequences.  In depressions, desperate people rarely turn to constitutional conservatives; rather, it is the environment from which socialists and fascists emerge.

Good public policy requires the consideration of longer-term effects as well as short-term and immediate effects.  As Thomas Sowell observed, in life "there are no solutions, only tradeoffs."

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