One of the paradoxes of the current lockdowns/restrictions that have been imposed by the State is that they make it much harder for private firms and individuals to plan ahead, particularly when the rules are nonsensical and change regularly. (Examples being how in the UK you can have a drink in a bar in certain places but you have to have it with a “substantial meal”, but the definition of latter is left unclear).
Critics of open societies and classical liberal conceptions of how things should be will argue that said classical liberals don’t fully appreciate the need for planning. Sometimes the phenomenon of the market is characterised as anarchic, and in need of planning and control. Markets are messy, so this argument goes, and wasteful and chaotic. So much neater to run things centrally. Now the arguments used to debunk this – such as from the Austrian school – are fairly well known and should be familiar to many of the readers of this blog (such as how no central planner, even aided by modern IT, can possibly know the vast array of tastes, desires and resources to make an extended market order actually work, etc).
But what strikes me is how advocates of Big Government, such as Paul Krugman, often don’t seem to appreciate how their policies and plans make it harder for individuals and the organisations they create to plan in the first place. The pandemic reaction is an example.
Some firms might have been able to plan once they know they are not going to be molested or face sudden changes to how they serve clients, but all too often this is not the case. Even with the Big Techs that have thrived recently, risks of anti-trust shakedowns are an uncertainty that might blunt their ability to plan and invest.
Across a large chunk of the economy, such as hospitality, entertainment, transport, sports and so on, planning has been a nightmare. To take one case in point: try to imagine how hard it has been to launch a film. In many cases, the movie industry has taken the line of least resistence and shut down.
This State regime uncertainty pushes back against the “just-in-time” inventory model that more stable times in the past had made possible, with its vast deepening of the division of labour. A far less predictable policymaking regime – aka “regime uncertainty” – is going to require people in future to accumulate more “padding” in the form of rising savings rates, back-up resources, and the like. But even such efforts are made harder as and when governments use fiat currency debasement to transfer savings to borrowers.
The need to plan ahead is in fact a central fact of life in a free society. We do it all the time. (Every day I jot down my work tasks for the day, for example.) The key is that these plans are those of free individuals acting on their judgement, and not because of some central, coercive authority standing over them.
When the State expands above a certain minimum level, this private planning becomes more, not less, difficult. It is in fact a classic rebuttal to President Barack Obama’s nonsensical “you did not build that” speech of a few years ago. People can and do build a great deal, provided the rules are clear and enforced. All too often, the State does a crummy job in defending legitimate boundaries, and as we see now, does a great deal of damage.
I’m in Tier 2.
One of my local boozers has apparently got in a beer called, “Substantial Meal”.
More seriously though, I have to second everything JP says. It had already occurred to me and, to a certain extent, affected me even though I’m a sole-trader so God knows what it must be like for large, complex businesses.
At the risk of accussing JP of stating the bleeding obvious he is stating the bleeding obvious – or what ought to be the bleeding obvious to everyone it needs to be said and said loud and often.
The MOST important thing for people to understand is that these lockdowns are not going away. Will there be changes in the months and years and decades ahead? Yes, there will be changes overtime – it will become looser and tighter in different ways in different places overtime. But basically, overall, the lockdowns are here to stay in one form or another.
To say this is outrageous is a huge understatement. In the USA, these lockdowns are the most egregious, widespread, and systematic violation of human rights since Jim Crow or slavery. And where is the ACLU? The ACLU is whining about “reimagining the police” and “citizenship for all”.
In democracy or constitutional republics, once the government starts doing something, the government never stops doing it.
Contrary to Shlomo and most people here, i don’t think that governments are keen on lockdowns, at least outside the US. Lockdowns decrease tax revenue, and governments hate that. But if you disagree, i won’t argue, because over here we haven’t been and are not in lockdown (yet?), so it would be futile for me to argue.
As for the main argument of the OP, i was reading just yesterday that Amity Shlaes made the same point about the New Deal: it made the Depression great (US only), in part because it made planning much more difficult.
Snorri – what country are you in if you don’t mind me asking?
I should append my previous comment to say that these lockdowns in the US are primarily in blue states and I think in the long run they will largely only be a thing in blue states. But that’s the problem – the civil liberties are only protected insofar as public opinion protects those civil liberties. It’s not rule of law protecting the civil liberties that these lockdowns are destroying, its just public opinion protecting these civil liberties. Very scary.
Lockdowns and Covid got the Democrats the presidency. Why should they stop? Remember the purpose of all government programs is to get politician re-elected and grow the size and scope of government bureaucracies. Covid is gold for both.
I don’t know how things are going to go, but there is an argument to be made that January 2020 was the zenith of the American republic.
Shlomo: I am in Estonia.
Actually, we had a limited lockdown in the 1st wave. Schools and universities turned to online learning. (Lots of connectivity over here.) Gyms, cinemas, and nightclubs were closed, but bars & restaurants remained open. (But they must have lost a lot of revenue, anyway.) Nobody was supposed to be closer than 2 meters to more than 1 other person, in public spaces (with exceptions for families living together). I myself went even further than that; but at least it was my free choice.
The government paid a lot of subsidies to small companies, but public debt is, or used to be, below 10% of GDP.
Now there is a 2nd wave. The government has left more things open, but we are required to wear facemasks in indoor public spaces. I don’t mind. The policy is not strictly enforced, anyway.
Already a week before masks became compulsory, about 50% of people in supermarkets and shopping centers wore them. (Including me, though not regularly.) As a result, it seems that the infection rate is beginning to decrease; but it might be a false alarm.
We did MUCH better than Sweden in the 1st wave, and so far we are doing no worse in the 2nd: deaths, cases.
Shlomo, the idea that the ACLU or any other “civil liberties” body gives a flying fuck about the horrors of lockdown is a joke. I agree with you 100% as to how lame such groups have been. (When I start agreeing so much with Shlomo, you know it is bad.)
Things are very dangerous now, in parts of the West. Here, in the UK, Boris Johnson and the devolved governments in Wales and Scotland appear to be making a power grab over aspects of our lives that have nothing to do with Covid, as far as I can tell.
Governments care about enlarging their own power. Tax revenue is only one part of a government’s power – and it’s not even a particularly important part of governmental power because money can just be printed when needed anyway. I’m not convinced that long term tax revenue will really go down much as a consequence of the lockdown over the long run, anyway.
But government’s power grows ENORMOUSLY from these lockdowns.
1. Government now holds power over life and death over every small business because of SELECTIVE ENFORCEMENT. NYC isn’t enforcing its draconian lockdown equally. Certain communities and neighborhoods have been targeted for political reasons (mostly Greek, Italian and Ultra Orthodox Jewish areas). Governments with these lockdown regulations have the powers of judge, jury and executioner on every small business. This is the power of LIFE AND DEATH. Selective enforcement is a HUGELY powerful tool that governments use to force businesses and people to cooperate with the government on unrelated political matters – and we will see that happen more and more in future.
2. Massive spikes in unemployment
3. Huge transfer of market share from small businesses to international mega corporations. This is a PERMANENT change in the economy happening in real time. Small Mom and Pop shops are shutting down by the thousands in many cities and across many regions. Hardware stores, bars, restaurants, nightclubs, spas, barbershops, coffee shops, nail salons, delis GONE. Forever. Who benefits? A big chunk of the unofficial government: Amazon, Home Depot, WalMart, Target, McDonald’s, Starbucks, etc etc.
4. We used to have a mix of corporatism, capitalism, and socialism in America. What is coming is primarily corporatism with a heavy dose of socialism and a very small amount of real capitalism. Entrepreneurs could hardly ever succeed pre-COVID; post-COVID it will be damn near impossible. This makes the clients of governments (mega corporations) happy.
5.Information. The power of information. Currently if I want to dine indoors at a restaurant or bar I have to give my full name, address and phone number to the restaurant or bar. Literally. This is a huge violation of freedom and privacy. And it’s not going away.
Shlomo:
Tax revenue is one of a few essential parts of government power. Without tax, the government has no power whatsoever.
Besides, once debt/GDP gets above 100%, there is no getting out of jail by printing money.
Your other points are valid (first time i find sound arguments for why governments might like to lock down) except #2. I don’t see what good it does to have high unemployment. Actually, it does harm because you have to spend more on benefits while raking in less tax revenue.
Some governments, particularly some authoritarian ones, do not rely on primarily on taxation for power. They own and export natural resources in exchange for (mostly but not always) dollars (yes I know some may argue this too is “taxation,” but I find that a stretch). They can print more of their domestic currency, but that worsens inflation and so doesn’t gain them much.
Huge transfer of market share from small businesses to international mega corporations. This is a PERMANENT change in the economy happening in real time. Small Mom and Pop shops are shutting down by the thousands in many cities and across many regions. Hardware stores, bars, restaurants, nightclubs, spas, barbershops, coffee shops, nail salons, delis GONE. Forever. Who benefits? A big chunk of the unofficial government: Amazon, Home Depot, WalMart, Target, McDonald’s, Starbucks, etc etc.
Exactly. And isn’t it interesting that much of today’s contemporary Left has little to say on this? OK, we get some carping about “Big Business” and calls for anti-trust occasionally, but actually it is not all that much, given what is going on. Add in central bank money printing and inflation of equities, and dividend payouts, and this entrenches a certain form of corporatism even more.
To some extent the situation now is far, far worse than the somewhat misunderstood “gilded age” of late 19th Century America, because at least then there was the Gold Standard and a relatively stable monetary order. What is so deadly today is the mix of irrational and arbitrary government interference with sectors and an addiction to the morphine drip of cheap money.
The destruction of small and medium-sized firms that cannot operate under lockdowns is squeezing the middle class, badly. It is also driving the kind of problems that the US writer Joel Kotkin writes about. Here is his latest about the “New Feudalism”, which summarises much of what Shlomo is on about here. http://joelkotkin.com/00927-new-feudalism/
Massive damage has been done to the economy and society of many nations.
I have long thought it astonishing (utterly astonishing) that countries have managed to withstand the utterly insane policies pushed for so many years – I would NOT have expected Britain and so on to be able to survive the sort of Credit Bubble orgy that has been totally out of control for so many years (I was wrong – Western countries did manage to survive this, “there is a lot of ruin in a great nation”).
So the international establishment elite (which has been waiting so long) decided to take a sledgehammer to the economy and society of many Western nations – hence the “lockdowns” and other restrictions.
It was nothing to do with “saving lives” we know that now, and everything to do with smashing society so that a “Great Reset” of “Build Back Better” Collectivism could occur – the same agenda that reaches back so many decades (to the 1960s at least) and was made official with the “legally non binding” agreement of Agenda 21 in 1992 – the Social Justice, Diversity, Sustainable Development totalitarian agenda.
Could the West have survived had they (the international establishment elite) not launched their all out attack in 2020? I do not know – after all the entire financial system was already a Credit Bubble farce BEFORE 2020.
But we will never know if the West could have survived – as the establishment elite (on an international scale – even using the same SLOGANS) decided they were not going to wait for the Western World to die – they were going to smash the West on the head with the largest hammer they could find, till we were destroyed.
And, do not forget, this was the international CORPORATIONS just as much as the government officials and “experts”. They are all “educated” people – they go to the same conferences, and they support the same agenda of a Corporate State with the freedom of ordinary people utterly crushed.
J.P. – my only objection to the term “the New Feudalism” is that it is rather unfair to Feudal law, which does not always mean serfdom and so on.
“The New Serfdom” would be a better term – or what Hayek called in 1944 “The Road to Serfdom”.
Blood samples taken in December 2019 by the Red Cross have antibodies for COVID-19.
(Someone on this forum said as much at the time).
What does that tell us about the COVID-19 panic merchants? Busy spreading fear and dread for the last year?
“…advocates of Big Government, such as Paul Krugman, often don’t seem to appreciate how their policies and plans make it harder for individuals and the organisations they create to plan in the first place.”
I think they do appreciate it and that their purpose is to prevent individual action.
iowaan – I agree with you.
At this stage it is clear that the international establishment elite are malevolent – they are not making innocent mistakes, they are crushing liberty on purpose.
Sadly Agenda 21 – Agenda 2030 “Build Back Better” “Sustainable Development” “Stakeholder Capitalism” (FASCISM – Corporate State) is not a “Conspiracy Theory”, it is all real – horribly real.