Consumers Drive COVID Response Not Government
In a live session on Real Vision with Raoul Pal, Ed Harrison wondered,
can the likes of North Dakota, which has a ridiculous number of COVID cases per capita-- actually death rates which are the highest in the world if you look at it on a country-wide basis-- can they muscle their way through this? Can they continue to just keep it going and let the whole thing flame out? Or are they eventually going to be forced to heel and roll back the economy, either because of consumer behavior or whatever?
Mr. Pal responded, “: I-- the scientists will say, probably not. The libertarians would say, that's what you should do.” Phillip Bagus, writing on mises.org, went to the deceased Mr. Libertarian, Murray Rothbard, for answers as to what libertarians would do. Can lockdowns be justified?
Bagus quotes Rothbard concerning ownership of the streets and use of those streets. “In the libertarian society…streets would all be privately owned, the entire conflict could be resolved without violating anyone’s property rights: for then the owners of the streets would have the right to decide who shall have access to those streets, and they could then keep out ‘undesirables’ [in our case people suspected of being infected with viruses] if they so wished.”
Following that logic, Bagus believes, “in a libertarian world private street owners would decide which streets would remain open, to whom, and under what conditions.”
He follows with,
In a libertarian world with private streets and private businesses, the owners impose the rules. In the case of an epidemic, they may close their property completely to the public. Or they could invite people conditionally to their property. For instance, they could limit the number of people who can access it. They could require tests before entering the property or declare that entering is at their own risk. They could also impose certain conditions, such as an age restriction or the required wearing of masks and gloves.
Do we have a duty to help our fellow citizens by social distancing and wearing masks? Rothbard said no.
No man can therefore have a “right” to compel someone to do a positive act, for in that case the compulsion violates the right of person or property of the individual being coerced….As a corollary, this means that, in the free society, no man may be saddled with the legal obligation to do anything for another, since that would invade the former’s rights; the only legal obligation one man has to another is to respect the other man’s rights.
Bagus concludes with, “There is only one alternative to the arbitrary central planning of government, with its violation of private property rights. This alternative is libertarianism, the alternative that Murray Rothbard always staunchly defended: the voluntary decisions of private property owners.”
Rauol Pal doesn’t care much for theoretical worlds. He’s trying to make money. To that point, he finished his answer to Harrison’s question about North Dakota and powering through with no government restrictions with, “But in my perspective, it makes no difference, because I look at the economy. And if we look at the economy, we've seen every time we've left it unencumbered or encumbered, we end up with economic weakness.”
Everything else is the solution decided by politics and science. And different people will slice it different ways. All I know, it's irrelevant, because the economy weakens. So anybody who says just let the virus flame itself out still is going to get the economic downside, because people have risk aversion. They don't want to get ill. Nobody wants to get ill. So you all take evasive action. Everybody taking evasive action is lowering of GDP.
So either which way, the economy is in, and will continue with, a depression or recession, whichever word you want to use. panics, crises, depressions and recessions are when the economies heal from previous malinvestment. “The ensuing recession is a period of repair and readjustment. Prices and costs adjust anew to consumer choices and preferences,” explained Hans Sennholz. There are decades of malinvestment and distortions to correct.
Libertarians who claim the government’s actions are worse than the disease, are giving the government too much credit. Consumers are driving the slow-down, not governments. Politicians always wish to be seen as doing something and solving problems, when in fact, government, as usual, isn’t leading, it’s following. All government actions do is create distortions that consumer behavior would not.
Long-term economic changes, which were already underway, are simply being accelerated. The U.S. economy was not healthy prior to the COVID-19 outbreak. It was only kept somewhat afloat with massive monetary stimulus, enabling zombie corporations to continue operating and wasting capital.
It’s long been thought that the United States has too much retail space, office space, casino space, and likely too many restaurants and bars (based on historical failure rates). The need for in-person business meetings and in-class education have been questioned for years. Private business has adjusted quickly and will continue to make changes. Doctors and hospitals have made giant strides in treating COVID in a relatively short period of time.
COVID or not, this depression was long overdue. While the government attempts to flatten the curve of COVID cases, it accentuates the curve of economic distress.
