What the Pandemic Revealed – Niskanen Center

On March 3, in response to reports that some Republican lawmakers favored free testing and treatments for COVID-19, Derek Thompson of The Atlantic tweeted, There are no libertarians in a pandemic. The witticism bounced all over social media during the ensuing days and weeks and with good reason, since the jab hit its target squarely on the nose.

When public safety is threatened, whether by war or disease, our dependence on government becomes immediately and viscerally obvious. There are no Centers for Disease Control in the private sector. There is no possibility of swiftly identifying the virus, and launching a crash program to develop tests, treatments, and vaccines, without massive government support for medical research. And for those tests, treatments, and vaccines to be effective, their distribution cannot be restricted by ability to pay; government must step in to ensure wide availability.

In addition, vigorous use of the governments emergency powers banning large public gatherings, temporarily shutting down schools and businesses, issuing stay-at-home orders, quarantining the sick and those exposed to them has been needed to help contain the outbreak. When a highly contagious and fatal disease can spread before its victims even show symptoms, the libertarian ethos of personal responsibility do what you want, and bear the consequences for good or ill leads not to mass flourishing but to mass death. Only the government has the power and resources to internalize the externalities of contagion and coordinate a rational response.

Despite being put on the defensive, supporters of free markets and limited government were able to respond with some fairly effective counterpunching. In the first place, the fact that certain kinds of government action are necessary under the extraordinary conditions of a public health emergency a fact freely acknowledged by many libertarians and partisans of small government does not mean that expansive government across the board is a good idea in normal times. Further, in the emergency now upon us, overweening government has contributed significantly to the scale of the pandemic here in the United States. Effective responses to the outbreak have been badly hampered by inadequate supplies of test kits and equipment, and primary responsibility for this failure rests with the Food and Drug Administration and its heavy-handed regulatory approach. A key blunder was the decision in early February to allow only the CDC to produce and conduct tests; problems with the CDCs initial test then led to weeks of disastrous delay.

Meanwhile, responding to the crisis has necessitated a string of regulatory waivers at the federal and state levels to allow doctors and nurses to work out of state, to facilitate telemedicine, to expand the scope of work that non-M.D. health professionals can do, to allow restaurants and bars to sell alcohol to takeout customers, and more. The relevant rules have been put aside temporarily as obviously dysfunctional now but perhaps that means at least some of them are dysfunctional, if less obviously, all the time?

And although emergency measures to slow transmission of the virus were clearly called for, the actual restrictions imposed were certainly not above criticism. As we have learned more about how the virus spreads, it appears that bans on outdoor activities went too far and may have been counterproductive. Where to draw the line between permitted and proscribed was never going to be an exact science in the fog of crisis, but there were plenty of cases of seemingly arbitrary distinctions (for example, one jurisdiction banned use of motorboats but not nonmotorized boats) that did nothing to advance public safety but did undermine the legitimacy of necessary restrictions.

The points scored on both sides in this back-and-forth hold profoundly important implications for the intellectual future of the political right. To begin with, the pandemic makes clear that there will always be a vital need for critical scrutiny of governments actions, and thus an important role to play for those with a skeptical view of government power and competence. Even in the middle of a public health emergency, when the case for broad government powers is overwhelming, there is no guarantee that those powers will be used wisely or effectively. The CDC and the FDA both have thousands of employees and multi-billion-dollar annual budgets; notwithstanding those considerable resources at their disposal, and the obvious importance of controlling infectious diseases to their missions, those two agencies failed in the relatively simple task of developing viral infection tests in a timely manner with a staggering cost in lives and dollars lost as a result of their incompetence.

Just because we give government the requisite authority and funding to perform some task, we cannot assume that the result will be mission accomplished. Indeed, there are sound reasons to assume otherwise. Overconfidence and the lure of technocratic control provide an ever-present temptation for governments to overreach; the lack of clear feedback signals about the effectiveness of government actions dulls incentives to recognize problems and improve performance; there is always a risk that government authority, no matter that its exercise is unquestionably called for, will be misappropriated by insiders to benefit them at the publics expense. Placing and defending limits on government, preventing and rolling back excesses, are therefore jobs that will always be with us.

But if the pandemic has shown that a critical stance toward government is always needed in formulating and evaluating policy, it has demonstrated even more forcefully the limitations and shortcomings of libertarians exclusive focus on government excess. The gravest failures in the government response to the pandemic were sins of omission, not commission not unnecessary and ill-advised interference with the private sector, but the inability to accomplish tasks for which only government is suited. Yes, at the outset of the crisis the FDA was disastrously over-restrictive in permitting labs to develop their own tests for the virus, but it is flatly risible to suggest that everything would have worked out fine if only government had gotten out of the way. Leaving aside the decades of government support for medical research that made it technologically possible to identify the virus and test for its presence in a human host, there is no way that private, profit-seeking firms would ever develop and conduct the testing, contact tracing, and isolation of the infected needed to slow the spread of the virus. Government funding and coordination are irreplaceable. Looking ahead, there is no prospect for rapid development and wide distribution of treatments and vaccines without a heavy dose of government involvement.

The pandemic produced not only a public health crisis, but an economic crisis as well the sharpest and most severe contraction of economic activity since the Great Depression. While the economic collapse was doubtless aggravated at the margins by forced business closures and stay-at-home orders, those interventions largely codified the publics spontaneous response to the uncontrolled outbreak of a highly infectious and potentially fatal disease. Its quite simply impossible to run a modern economy at anything near its potential level of output when people are afraid that going to work or going shopping might kill them or their loved ones.

Government excess, in other words, was not the fundamental problem. On the contrary, a large and activist government was all that stood between us and mass privation and suffering on a mind-boggling scale. Only government can mitigate the economic effects of the pandemic in the same way it responds to other shocks that lead to other, less drastic slumps by acting as insurer of last resort, using its taxing, spending, borrowing, and money-creating powers to sustain household spending and keep businesses afloat until resumption of something approaching normal economic activity is possible.

Unfortunately, the patchwork kludgeocracy that is the American welfare state was poorly suited to meet the challenge of the coronavirus shock. Our employment-based health insurance system left people abandoned in their hour of need as layoffs spiked into the tens of millions. The absence of any well-designed system of automatic stabilizers sent states and localities hurtling toward fiscal collapse. Many state unemployment insurance systems fell victim to antiquated software based on long-defunct programming languages while one states system was exposed as having been designed purposefully to discourage people from claiming benefits. Policymakers flailed in their efforts to extend emergency aid to businesses, forced to go through banks with improvised lending programs that too often funneled money to where it was needed least.

In the current double crisis, what has been lacking is not restraints on government power. What has been lacking shockingly, shamefully, tragically lacking is the capacity to exercise government power effectively. Of course that incapacity has been most obvious at the top, with the shambolic failures of the Trump administration to prepare for the outbreak and lead a coordinated, coherent national response. But the backwardness and incompetence of American government have been visible at all levels especially in contrast to the sophisticated and efficient governance on display in places as diverse as South Korea, Taiwan, Hong Kong, Australia, New Zealand, and Germany.

How far weve fallen is truly shocking: The country that beat the Nazis, conquered the atom, and put a man on the moon now struggles to produce enough masks for its doctors and nurses. Over more than two centuries, the United States has stirred a very wide range of feelings in the rest of the world: love and hatred, fear and hope, envy and contempt, awe and anger, wrote Irish columnist Fintan OToole, voicing the emerging and humiliating verdict of global public opinion. But there is one emotion that has never been directed towards the U.S. until now: pity.

As to how to close Americas deficit in state capacity, a question with millions of lives in the balance, libertarianism has nothing to say. The libertarian project is devoted exclusively to stopping government from doing things it ought not to do; its only advice about how to improve government is less. When it comes to making government strong enough and capable enough to do the things it needs to do, libertarianism is silent.

Actually, worse than silent. It is quite simply impossible to lead any institution capably without believing in the fundamental integrity of that institution and the importance of its mission. And the modern libertarian movement, which has done so much to shape attitudes on the American right about the nature of government and its proper role, is dedicated to the proposition that the contemporary American state is illegitimate and contemptible. In the libertarian view, government is congenitally incapable of doing anything well, the public sphere is by its very nature dysfunctional and morally tainted, and therefore the only thing to do with government is in the famous words of activist Grover Norquist to shrink it down to the size where we can drown it in the bathtub.

The gradual diffusion of these anti-government attitudes through the conservative movement and the Republican Party has rendered the American right worse than irrelevant to the project of restoring American state capacity. It has become actively hostile, undermining the motivations needed to launch such a project and the virtues needed to pull it off.

As Ive already argued, none of this means that libertarians are wrong about everything, or that libertarian ideas are worthless. But it does mean that skepticism about government, standing alone, is an insufficient foundation for good governance. The insights of libertarian thought suspicion of centralized power, alertness to how even the best-intended government measures can still go horribly wrong, recognition of the enormous fertility of the marketplaces decentralized, trial-and-error experimentation are genuine and abiding. But they are not sufficient.

The ideology of libertarianism claims otherwise: It asserts that a set of important but partial and contingent truths are in fact a comprehensive and timeless blueprint for the ideal political order. The error of this assertion has been made painfully obvious by the pandemic, but it was increasingly evident for many years beforehand. The overlap between genuine libertarian insights and the pressing challenges facing the American polity has been steadily shrinking since the end of the 20th century.

I say this as someone who discovered libertarian ideas in the 1970s. Back then, the intellectual orthodoxy tilted heavily in favor of top-down, technocratic management of economic life. Paul Samuelsons bestselling economics textbook was still predicting that the Soviet Union would soon overtake us in GDP. John Kenneth Galbraith argued that competition was as pass here as it was behind the Iron Curtain; the technostructure of central planning reigned supreme, whether it took the form of the Politburo or Big Business. As to the newly independent countries of the postcolonial world, there was widespread confidence that a big push of state-led investment would put them on the fast track to prosperity. Here at home, the dominant economic analysis of regulation continued to assume that its scope and content were guided purely by considerations of the public interest as opposed to any political factors. And inflation was widely assumed to be an affliction endemic to advanced economies that could be subdued only with price controls.

The intellectual turn against markets had derived enormous momentum from events. The catastrophic collapse of the Great Depression had seriously discredited capitalism, while the energetic experimentation of the New Deal showcased government activism favorably. Belief in the benevolence and effectiveness of American government, and the crucial importance of collective action for collective welfare, gained further strength from the experience of World War II. And the glittering economic performance of the postwar decades under the Big Government-Big Business-Big Labor triumvirate seemed to confirm that government management and economies of scale had permanently displaced upstart entrepreneurship and creative destruction as the primary engines of progress.

But by the 1970s, events had turned. Stagflation, the combination of soaring prices and slumping output, was afflicting the country despite the fact that its very existence was a baffling mystery to the reigning practitioners of macroeconomic fine-tuning. In cruel mockery of the noble goals and soaring rhetoric of the War on Poverty, a major expansion of anti-poverty programs had been followed by waves of urban riots, a soaring crime rate, and the catastrophic breakdown of intact families among African-Americans. The auto and steel industries, pillars of the economy and only recently world leaders in efficiency and innovation, were buckling under the competitive challenge of imports from Europe and Japan. Gas lines and periodic rationing suggested a grim future of ever more tightly binding limits to growth.

Against this backdrop, the rising movement of libertarian thought and free-market economics represented a much-needed corrective. The information processing and incentive alignment performed by markets had been seriously underappreciated, as had the gap between the theoretical possibilities of government activism and what was actually achievable in practice. Under the circumstances, it mattered little that the new movements philosophical foundations were shaky and its empirical claims overstated. At the relevant margins, the critics of Big Government had the better of the argument overall and were pushing in the right direction. After a massive increase in the size and scope of government over the course of decades, the nation was reeling from multiplying economic and social ills. The time was ripe for a thoroughgoing critique of top-down, centralized, technocratic policymaking.

During the 1980s and 1990s, the return of boom times at home, the collapse of communism and the rise of globalization abroad, and the entrepreneur-led information technology revolution seemed to affirm the conclusion that the era of big government is over. But with the dawn of a new century, the tide of events shifted again. The failure of another round of tax cutting to unleash dynamism and growth; the incompetent response to Hurricane Katrina; the bursting of the housing bubble and the ensuing financial and economic meltdown; the opening of a yawning class divide along educational lines; the spread of social problems once identified with the urban underclass to broad swaths of the country; the rise of deaths of despair; and now the coronavirus pandemic in the face of all this, the one-size-fits-all prescription of cutting taxes, government spending, and regulatory costs imposed on business looked increasingly irrelevant, if not like outright quackery.

The ideals of free markets and limited government remain vital, and vitally important. But the times have made plain that the dominant conceptions of these ideals, rooted in libertarian ideology, are fatally flawed. That ideology is based on fundamental intellectual errors about the nature of politics and the conditions that make individual freedom and competitive markets possible. And as that ideology has moved beyond theoretical inquiry to exert real influence over political actors, its effects on American political culture have ultimately been nothing short of poisonous.

For those of us who continue to believe in the indispensability of a critical stance toward government power, the task before us is one of intellectual reconstruction. We must reject minimal government as the organizing principle of policy reform. Making or keeping government as small as possible is an ideological fixation, not a sound principle of good governance. Small government is a false idol, and it is time we smash it. In its place, we should erect effective government as the goal that guides the development and evaluation of public policy. For maxims, we can look to Americas greatest stateman. The legitimate object of government, wrote Abraham Lincoln, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselvesin their separate, and individual capacities.

Guided by the principle of effective government, we will sometimes conclude that government needs to be smaller, and sometimes that it needs to be larger depending on the circumstances. Given where things stand today, we will often conclude that government can be made simpler. We will continue to champion the ideals of free markets and limited government, but we must reconceive those ideals to free them from their libertarian baggage.

Free markets are the foundation of our prosperity and an important motor of social advance. But we need to see them, not as something that exists in the absence of government, but rather as complex achievements of good government. Free markets as we know them today are impossible without the modern state, and they function best when embedded in and supported by a structure of public goods that only government can adequately provide.

The guiding principle of effective government, meanwhile, continues to impose important limits on the exercise of state power but the contours of those limits are quite different from those demanded by libertarian ideology. Here the limiting principle addresses not the scope or subject matter of government action, but rather the effect of that action: The government policy or program in question must actually succeed in advancing its stated public purpose, and under no circumstances may benefit narrow private interests at public expense. The limiting principle, then, grows out of commitment to the public interest, not antipathy to government. The critical stance associated with policing the proper limits of state action thus shifts from anti-government to anti-corruption.

But reconstruction cannot proceed until demolition clears the scene. Accordingly, in Part Two of this series of essays, The Dead End of Small Government, I will identify what I see as the fundamental deficiencies of the libertarian ideology that has done so much to shape economic orthodoxy on the American right. Then in Part Three, Free Markets and Limited Government Reconceived, I will turn to how these important principles of good governance can be rescued from the errors and blind spots with which they are now tangled up.

Let me conclude this essay with an important qualification. My argument here is about economic and social policy: To meet the looming challenges of poor economic performance; widening social divisions; and threats to public health, we need more capable government, not more constrained government. Accordingly, the exclusive libertarian focus on restraining government power is not just irrelevant to confronting our problems, but actively counterproductive. But as recent events have made painfully clear, there are other areas of public concern where restraining government power remains not only relevant, but morally urgent. Here I am referring, of course, to the police murder of George Floyd, the latest in a long string of such incidents, and the weeks of protests in its wake (which have regrettably resulted in many further examples of inexcusable police violence). But not just that: In all the agencies of American government that deal directly in physical force not just the police, but the larger criminal justice system, the immigration authorities, and the military problems of excess and overreach and abuse are widespread.

The militarization and brutalization of police tactics; the immense waste and suffering caused by the War on Drugs; the moral stain of mass incarceration, deepened by the appalling cruelty that is widespread in Americas jails and prisons; the specter of mass surveillance; the caging of children on our border and betrayal of our heritage as an asylum for refugees; the forever wars in Afghanistan and Iraq, with spinoff military engagements in countries all over the region on all of these fronts, libertarians portrayal of government as Leviathan is all too accurate, and their calls for additional chains to bind it are well founded.

This qualification, though, only highlights how misguided it is for libertarians to conflate the provision of public goods, social insurance, and pro-market regulation with real problems of unchecked power. The vital work of controlling the instrumentalities of state violence is always difficult, but libertarians worthy efforts along these lines are badly undercut by their small-government fixation. Not only do they compromise their case by mixing bad arguments with good, they alienate themselves from their natural allies in particular, those communities that suffer most at the hands of excess force and thereby weaken the coalition needed for constructive change.

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What the Pandemic Revealed - Niskanen Center