The Post-Pandemic World Is One Of Widespread Dependence On Government
The state strives for power, and what grants power is fear and dependence. The state is making people dependent on it, both as means for control and as an outcome of many policies intended to provide relief.
We have seen a lot of fear and dependence in this pandemic. Fear has been the message that has propelled types of repressive policies that were not possible before. Had anyone suggested only over a year ago that whole countries, democratic European countries, would close down and quarantine people in their homes most of us would have thought him crazy.
But it happened. Because fear was drummed up, many populations went along with it. Even though they later protested and resisted, it was too late. Much of the damage was already done. And of course, many feared not only the virus but also the police, which sometimes with enormous brutality cracked down on those seeking a breath of fresh air after weeks stuck in their homes.
It is possible to roll back these policies. However, many of them will need to be rolled back for society to function again. To be clear, it is not possible for the state to keep everybody locked in their homes for long. This is an overreach and points to the limit of the state's power. When the people rise in opposition, as we've seen in this pandemic, the state has no power.
Much more troublesome is the other side of the lockdown and the damage caused to the economic system. Not only were people locked down, but society and therefore practically the whole economy was forcefully paused. The problem here is that there is no "Pause button" for the economy. It may sound easy for politicians, who have no conception of how the real world works. But you cannot simply pause a business. You also cannot pause the supply chain. If you have ever run a business you know that being an entrepreneur is not a steady state but a changing process. It is a constant struggle to get money to come in so that you can cover costs that you've assumed long ago. That's what entrepreneurs and businesses do. They assume costs and imagine they will be paid for their efforts later, and paid more than the cost they already assumed.
In other words, if you "pause," a business, the costs remain but you get no revenue. How are you going to pay those bills when everything is on pause? You cannot. This is perhaps easy to understand … so easy that even some politicians grasp the concept. So many countries like the United States have offered relief in the form of loans to businesses. Of course, such schemes come with the usual cronyism and favoritism. The loans often do not end up in the hands of those intended.
They also shift power and influence away from the market to the bureaucrats in government. Or to put it differently, businesses survive or go under as decided by bureaucrats, not by consumers.
The long-term effects of this madness have yet to be seen. Even if the virus disappears tomorrow, these problems will remain. They take time to be resolved and it takes lots of work to piece things together again even if it is all possible. The issue here is that this would be a very bad situation if it were a sudden shock to an otherwise free market economy.
For every person who loses their job and becomes dependent on the unemployment benefits and other subsistence, the economy both loses production and must carry a heavier load. As a result, the economy becomes less lively and exuberant. There is less entrepreneurship, there is less production, which means there are fewer opportunities for people to find jobs. They become ever more dependent on the state.
More people become dependent on the state and thereby add to the burden to those who are not. This is a recipe for disaster because it leads us down only one path, which Hayek referred to as "the road to serfdom." The state grows like a disease in a body that is not healthy enough to withstand the attack. Politically, this is a path to the all-encompassing state—totalitarianism.
The state needs and is granted more power as more people become dependent on it. That is the sad truth and that is what we are seeing. Those depending on it are all too willing to grant a little more to get the system fixed. The problem, however, is not the inability of the state. The state never has such ability. The problem is a lack of market, and this lack becomes more present the more the state grows. This is the reason for pushing harder against the state, but for most the incentives are exactly the opposite, to ask for more. This is what we are dealing with and why we must break people's dependence on the state.
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