If You Think This Crisis Is an Advert for Bigger Government, You Haven’t Been Paying Attention

This article appeared on UK Telegraph on May 1, 2020.
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Major wars usually increase the size and scope of government permanently. The historian AJP Taylor famously regaled how a typical Englishman might only have encountered the state through policemen and the Post Office prior to 1914.

The First World War then saw government spending jump from 8pc of GDP to 19pc through the 1920s, alongside new trade protectionism and wage bargaining councils.

The Second World War had a more profound legacy still. Again, government spending settled 10 percentage points of GDP higher in the 1950s than pre‐​war. This time the modern welfare state’s spending ratchet had been introduced, too. Government industrial control, meanwhile, took nearly four decades and Margaret Thatcher to fully shake off.

When today’s Prime Minister alludes to Covid‐​19 being akin to war, it is therefore natural to consider its impact on the state’s contours. Jeremy Corbyn, the former Labour leader, believes the crisis proves socialism “absolutely right”, naturally.

But other members of all parties seem to think Covid‐​19 emboldens the case for bigger government afterwards, albeit wrapping their wishes for industrial policy, protectionism or new welfare programmes in the weasel words of the need for “economic rebalancing”, “rethinking globalisation” or a “new social contract”.

Just as there is no atheist in a foxhole, there is no complete “laissez faire” liberal during a pandemic. We face a genuine public health crisis with appalling trade‐​offs. Yet how anyone can objectively conclude that this emergency has been an advert for bigger government to endure post‐​crisis is beyond me.

This period has highlighted the flaws inherent in political decision‐​making, central planning and state mobilisation with painful regularity, even when the Government has a clear, singular goal.

A pandemic was not unexpected, remember. It was a “level five” UK threat — a danger with a relatively high probability of occurring, war‐​gamed as late as October 2016. Yet inadequate preparation will be little surprise to those who’ve studied natural disasters around the world.

Voters tend to reward politicians for day‐​to‐​day spending and emergency relief after a crisis hits, not for forward planning. A stitch in time costs votes. Such political incentives would, of course, afflict industrial or regional policy choices in any brave new world.

Then there’s the response itself. Public Health England rebuffed private efforts to assist with testing, relying on its self‐​described “command and control” strategy. Though they quickly developed a diagnostic test, one consequence was an inability to scale up testing early.

Christian Drosten, of the Institute of Virology at the Charité Hospital in Berlin, believes the UK lost precious time as a result compared to Germany — a country whose speed and low death rate he credits, in part, with harnessing “market forces”.

Who knew that demand and supply, rather than centralised planning, could be so beneficial?

The personal protective equipment (PPE) saga has a similar lesson, with centralised procurement and distribution creating huge delays, despite private businesses standing ready to help. The state’s failure to stockpile and overly prescriptive regulations all combined to leave healthcare workers more vulnerable than necessary to Covid‐​19.

Yet, strangely, evidence of government bodies failing to even manage PPE stocks is seen as no barrier to the Herculean task of the state planning the energy sector or “rebalancing” economic activity between regions.

In fact, this emergency proves how even existing government policies often undermine our resilience. Governments worldwide are slashing or suspending regulations to allow supermarkets to feed us, restaurants to open takeaway services, retired medical workers to return to healthcare and key workers to find scarce childcare for their children.

It might have taken extreme circumstances to show it, but pausing these laws is an acknowledgement they undermine our ability to innovate as circumstances change.

Likewise, a top‐​down edict to lockdown might have been necessary given our lack of south‐​east Asian style test‐​and‐​quarantine infrastructure. But we surely all now realise the crudeness of this one‐​size fits‐​all diktat.

Nobody in Whitehall has the knowledge or capability to map out complex supply chains, to assess whether any given business could have adopted protocols to open safely, nor what is best for all of our family members.

The result of this “knowledge problem”, inevitably, is the banning of much low‐​risk activity and needless pain and suffering, which always occurs with inflexible government mandates.

Now these are tough times and nobody could envy governing politicians. There have been clear successes, too: repatriating citizens stuck abroad, the building of NHS Nightingale hospitals, and the apparently successful launch of the business support programme.

But looking at the struggles faced even when the Government has had overwhelming focus on a singular goal, it is amazing how few people question the desirability of government programmes for “normal times”, when economic relationships are more complex and politicians face competing resource demands.

Some, of course, will inevitably conclude that all recent difficulties are about money — that “austerity” was the problem. But this doesn’t pass the sniff test. Some east Asian countries spend far less on healthcare, yet are coping better, while many European countries that spend far more have fared badly, too.

Bizarrely, few seem to be concluding that we examine the merits of other healthcare systems or pandemic plans. The instinct is always “more government”.

So what actually causes emergencies such as wars to grow government? It is unclear. Some believe it is the social solidarity that arises. Others point to the necessarily slow removal of programmes after the crisis. Perhaps a more ideological pro‐​state shift comes from the euphoria surrounding victory.

What is clear is that many are attempting already to “win the Covid‐​19 peace” for their favoured big government agenda. The pandemic itself though offers no evidence a bigger state is desirable.

Ryan Bourne

Ryan Bourne holds the R Evan Scharf chair for the public understanding of economics at the Cato Institute.