War is the health of the state,” warned writer and anti‐war activist Randolph Bourne more than a century ago. The same, he might have said, holds for those crises that are in many ways the equivalent of war, such as economic depressions or mass pandemics. Certainly, faced with both the COVID-19 contagion and the associated economic washout, there are things we want the government to do, from public‐health measures to short‐term economic interventions. The growth of the state at times like this is mostly inevitable.
On the other hand, sooner or later this crisis will end. We will get the coronavirus under control, and the economy will begin to recover. Many of the measures we are taking today will no longer be needed and may in fact become counterproductive.
Unfortunately, history suggests that the government is usually reluctant to shed its newfound powers after a crisis has passed. The Great Depression, World Wars I and II, the Cold War, and the 2008 financial crisis, to cite just a few examples, all left us with a permanently larger state. And the governmental aftereffects of this crisis could be even worse.
The Federal Reserve warns that we may see unemployment topping 30 percent, and banks have forecast GDP declining by an annualized rate of as much as 34 percent this quarter. Despite President Trump’s hopes, it is unlikely that the economy will quickly or easily bounce back to its previous health. But its recovery will be far more robust and happen far more quickly if we can preserve a dynamic and entrepreneurial form of capitalism. It is important, therefore, that the measures we put in place now not become an excuse to unduly burden businesses struggling to recover later.
Already, there are ominous warning signs on that front. The $2.2 trillion economic‐relief package passed by Congress may have been justified as a response to extraordinary circumstances, especially government orders shutting down many businesses. But the assistance it contains is not particularly well‐targeted. Bailouts for many big companies put the government in the position of picking winners and losers. Favored industries such as airlines and defense contractors have been singled out for assistance, as have politically important groups such as farmers. What’s more, much of this aid comes with new rules and regulations that enable the government to micromanage business operations. And perhaps worst of all, the government is expected to actually take a shareholder stake in some of the businesses being given a lifeline, such as airlines.
Beyond those concerns, there is the long‐term cost of piling new debt on top of old. When the economy was booming, neither Congress nor the Trump administration took any steps to rein in spending or the debt. Now, faced with an emergency, we’ve tossed another $2.2 trillion into the already‐deep pool of red ink. Throw in lower revenue from a faltering economy, and there will almost certainly be economic repercussions down the road.
It is not just our economy that is threatened by bigger government. We must also be careful to safeguard our civil liberties in the face of government expansion. Governments around the world have increased their willingness and ability to conduct mass surveillance in response to the coronavirus crisis. Government measures to curtail travel or limit public gatherings may be justified, but unless we remain vigilant, they could easily morph into something much more dangerous down the road. Some jurisdictions have used the epidemic as an end run around constitutional guarantees, whether closing abortion providers or limiting firearm purchases. And, there have been reports that the Department of Justice and state legal authorities have considered expanded pretrial detention.
While dangers abound, the news isn’t all bad. For example, the government has found it necessary to pause or abandon numerous existing regulations, from FDA‐approval to occupational‐licensing requirements. Americans may well decide that few of these regulations were needed in the first place and scrap them permanently. And it may become harder to demonize businesses that have stepped up to help fight the pandemic once life returns to normal.
The coronavirus has forced us to make some very difficult choices, sacrificing our economic dynamism and our liberties to save thousands or perhaps millions of lives. But eventually, the crisis will end. We must be very careful that the actions we take today, however necessary, don’t become a danger to us tomorrow.