Mises Wire

We’re Learning Why Governments Can’t Be Trusted with Health Crises

Although we’re told that strong governments are in the best positions to take action against pandemics, from the beginning of the SARS-CoV-2 outbreak, regimes have repeatedly failed to act, hid the truth, and were busy protecting their own reputations.

Strong States Made Things Worse

If COVID-19 originated in China, then the pandemic started in one of the most powerful and most centralized states in the world. The first weeks of its escalation were full of conflicts between individuals on the ground who saw the severity of COVID-19 and the seat of power a thousand kilometers away. Reminiscent of the Soviet regime’s reaction to Chernobyl, the behavior of the bureaucrats only confirmed that totalitarian regimes create incentives to hide rather than to solve problems so as to please those in higher positions of power.

The West doesn’t draw a much nicer picture these days.

In Italy, for instance, the socialized healthcare system, unprepared to react to a demand shock, crumbled under the pressure of a massive spike in severe cases caused by the virus. State- and federal-level disease prevention agencies underestimated the potential impact.

People who are used to having omniscient bureaucrats taking care of them didn’t listen to the warning signs of those who saw the writing on the wall. Politicians went from dismissing the threat or even outright laughing at it straight to making its consequences much worse by imposing market restrictions and limiting our basic human rights.

In Singapore and Czech Republic, the government intervened against “price gouging,” driving the supply of masks to almost zero. In the latter, the state even centrally managed the remaining supply in such a way that the distributors of supplies had to serve bureaucrats before the public.

Meanwhile, in Slovakia the state threatened to punish anyone spreading “misinformation,” when it was abundantly clear that the state itself knew almost nothing about how many cases there really were.

The state-run school systems failed to react as well, and parents were angry at the bureaucrats who forced parents to send their children to a potentially contagious environment.

And finally, the central banks of the world, who had already made the global economy more fragile by propping up numerous massive bubbles of malinvestment, are now making things only worse.

The Response of the Private Sector

In contrast to these examples, the private sector offered varied and critically important services. Early on, private companies recommended the expansion of remote work plans, restricted travel, imposed self-quarantine on risky employees, and installed infrared cameras on their premises. In the US, because government services are so mismanaged, the administration has had to heavily rely on cooperation with the private sector to manage the situation.

A completely private healthcare system would have best incentivized insurance providers to deal with the crisis early on to prevent massive damages to their bottom line later. Without regulators, the pharma industry would have raced to deliver both treatment and vaccines to the market, and people in cooperation with their doctors and insurance providers would have been able to decide how much risk they are willing to take with experimental precautions or remedies. But government restrictions prevented the widespread use and production of tests.

Local, Site-Specific Responses Are Better

One doesn’t need to be a hard-line libertarian to see that by keeping the decision-making authority and resources as close as possible to its constituents it becomes a lot more difficult for those in power to hide and possible to react a lot quicker based on local knowledge. In Switzerland, for example, the canton of Ticino introduced its measures before the federal government even got to seriously discuss the situation.

The worst-case scenario now is not only the continuation of the spread of the virus and the collapse of healthcare systems in more regions, but that the draconian restrictions of liberty, which would be impossible in smaller or completely free societies, will linger on for months or years and have massive long-term impacts on the world economy. Given that prosperity is the only way to increase human life expectancy and health, those measures might lead to an even higher death toll than the virus itself. Unfortunately, those impacts are impossible to calculate and thus those measures will be much more difficult to scale back. Remember, nothing lasts longer than a temporary government program and the power-hungry politicians never let a good crisis go to waste.

However, it is safe to assume that in smaller and decentralized societies these measures will be called off much sooner once the crisis passes, because the pressure from the people will be higher and the incentives for political showmanship much smaller than in large, highly centralized states.

Image Source: Getty
Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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